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R.A 10963 (TRAIN LAW): EFFECTS ON CONSUMPTION OF SWEETENED

BEVERAGES TO THE FILIPINO HOUSEHOLD in SELECTED BARANGAYS OF SAN

CARLOS CITY

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CHAPTER I
INTRODUCTION

INTRODUCTION PARAGRAPHS

According to Valencia (2015), taxation is the power of by which an independent

State, through its law-making, raises and accumulate revenue from its inhabitants to

pay the necessary expenses of the government. It is the process or act of imposing a

charge by governmental authority on property, individuals or transaction to raise money

for the public purposes.

Jones and Catanach (2011) define tax as a payment to support the cost of the

government. It is involuntary fees levied on individuals or corporation and enforced by a

government whether local, regional or national in order to finance the government

activities.

“Taxes are what we pay for a civilized society, without it, the taxes would be

paralyzed for lack of motive power to activate and operate it. Every person who is able

must contribute his share in the burden of running the government. The government, for

its part is expected to respond on the form of tangible and intangible benefits intended

to improve the lives of the people and enhance their material and moral values.”

(Commissioner vs. Algue Inc. 158 SCRA 9)

One of President Rodrigo Duterte’s 2018 resolution implemented is a new tax

reform that is beneficial to all. Introducing the Tax Reform for Acceleration and Inclusion

Act or TRAIN law is set to affect the life of million Filipinos, particularly on consumption.

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At the start of January 2018, the TRAIN Law immediately took effect. The impact

of this law on every Filipino household on consumption has very apparent. Many

consumers are having a hard time coping with the rising inflation on goods because of

the additional excise tax on sugar-sweetened, beverages, car and fuels. For some

Filipinos, this is a blessing as a take-home pay and bonuses increased depending on

salary bracket. Though this law is beneficial for some, not every Filipinos are pleased to

have this implemented, especially those who are earning a minimum wage, self

employed individuals, and unregistered enterprises.

STATEMENT OF THE PROBLEM

The implementation of TRAIN LAW has creating a fear to the middle class family

as it affects them positively and negatively.

This study aims to answer the following questions:

1. What are the effects of TRAIN Law to the Filipino citizens of San Carlos in

consuming sweetened beverages?

2. What are the benefits of San Carlos citizens regarding to the imposition of TRAIN

Law to the sugar-sweetened products?

PURPOSE

1. To know and identify the effects of TRAIN Law to the consumption of Filipino

households to the sugar-sweetened products?

2. To understand the situation of the Filipino household upon imposition of TRAIN

Law.

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3. To provide information whether this law gives a better lifestyle of Filipino

household;

4. To conduct possible suggestion or recommendation to the Filipino households on

its impact.

SIGNIFICANCE OF THE STUDY

The researchers believes that this study entitled R.A 10963 (TRAIN LAW): Effects on

consumption of sweetened beverages to the Filipino household in selected barangays

of San Carlos City will provide greater impact among consumers, administrators,

students, researchers and future researchers.

Consumers. The result of this study can be used to assess whether they

benefited from the implemented train law or their standard of living has improved.

Administrator. The result of this study can be used to assess whether the

implemented train law is efficient and beneficial to everyone.

Students. the result of this study can give them awareness and knowledge to the

impact of the TRAIN Law to the life and consumption of middle class family.

Researchers. The result of this study will help them to analyze and understand

deeper the effects of TRAIN Law to the consumption of the middle class family.

Future Researchers. The research will serve as their basis for the future studies

or research.

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HYPOTHESIS

The imposition of the TRAIN law has no effects to the consumption of sugar-

sweetened products of the Filipino households.

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Chapter II

REVIEW OF RELATED LITERATURE

Study of related literature implies location, reading and evaluating reports of researches
well as reports of casual observation that are related to the research project. The review
is a task that continues throughout the duration of the research. It begins with a search
for suitable topics. Once a topic been decided upon, it is essential review all relevant
which have a bearing on the topic.
History of Taxation

Local

History of Taxation

According to the Wikipedia, The policy of taxation in the Philippines is governed chiefly
by the Constitution of the Philippines and three Republic Acts.

Constitution: Article VI, Section 28 of the Constitution states that "the rule of taxation
shall be uniform and equitable" and that "Congress shall evolve a progressive system of
taxation."[1]

national law: National Internal Revenue Code—enacted as Republic Act No. 8424 or
the Tax Reform Act of 1997[2] and subsequent laws amending it; the law was most
recently amended by Republic Act No. 10963 or the Tax Reform for Acceleration and
Inclusion Act;[3] and,

local laws: major sources of revenue for the local government units (LGUs) are the
taxes collected by virtue of Republic Act No. 7160 or the Local Government Code of
1991,[4] and those sourced from the proceeds collected by virtue of a local ordinance.

Taxes imposed at the national level are collected by the Bureau of Internal Revenue
(BIR), while those imposed at the local level (i.e., provincial, city, municipal, barangay)
are collected by a local treasurer's office.

According to National Tax Research Center, Tax research in the Philippines was
institutionalized with the enactment of Republic Act (RA) No. 2211 (May 15, 1959)
creating the Joint Legislative Executive Tax Commission (JLETC). Providing technical
support to the Commission Proper was a Technical Staff which was formally organized
on April 1, 1960.

When martial law was declared in 1972, the commission proper of the JLETC was
dissolved. Recognizing, however, the vital role of a tax research institution in the overall

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economic development thrust of the New Society, then President Ferdinand E. Marcos,
through the recommendation of the Presidential Reorganization Committee, decreed
the conversion of the JLETC’s Technical Staff to the National Tax Research Center
(NTRC). On December 6, 1972, by virtue of Presidential Decree 74, the NTRC was
organized as a purely single-headed agency under the administrative supervision of the
National Economic and Development Authority (NEDA).

More than a decade after, in another wave of government reorganization brought by the
ascendancy of Ms. Corazon Aquino to the presidency in 1986, the NTRC was made an
attached agency of the Department of Finance (DOF) by virtue of Executive Order No.
127 (January 30, 1987).

Foreign

Colonial America

Colonist were paying taxes under Molasses Act which was modified in 1764 include
import duties on foreign molasses, sugar wine and other commodities. The new act as
known Sugar Act. Because the Sugar Act did not raise substantial revenue amounts, he
Stamp Act was added in 1765. The Stamp Act imposed a direct tax on all newspaper
printed in the colonies and most commercial and legal documents

Egypt

During the various regions of the Egyptians Pharaohs tax collector were known as
scribes. One the scribes imposed a tax on cooking oil. To insure that citizens were not
avoiding the cooking amount of cooking oil was consumed and that citizen were not
using leaving generated by other cooking processes as a substitute for the taxed oil.

Greece

In times of war Athenians imposed a tax referred as eisphora. No one was exempted
form tax which was used for paying wartime expenditure. The Greeks were one of the
few societies that were able to rescind the tax once emergency was over. When
additional resources were gained they refund the tax. Athenians imposed a monthly poll
tax on foreigner, people who did not have both Athenian Mother and Father. They taxed
drachma for men and a half drachma for women. The tax was referred to as metoikion.

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REVIEW OF RELATED STUDIES RELATED STUDIES


LOCAL

According to the Ateneo De Manila Senior Highschool in they’re talk that the most
obvious reason for paying taxes is to fund the provision of public goods and services.
For the purposes of this discussion, let us just define “public goods and services” as
goods and services that benefit the general welfare of the people. In that case, “public
goods” would include national defense, administration of justice, internal security,
conduct of foreign policy, some types of infrastructure, and all sorts of programs
implemented by the government. The point is without taxpayer money, the government
will not be able to provide its citizens with such “public goods and services”.

Another reason for taxation, which may not be too obvious to you at this point, is to
approach a more equal society. One of the ways to redistribute wealth is with tax policy.
Once you start working and filing for taxes, you will find out that those who earn more
also pay more taxes - this is called progressive taxation. And as discussed earlier, the
revenues collected from taxation will be channeled to poverty-alleviation and
development interventions. You can see this principle applied to the TRAIN Law. As
your income bracket goes up, you give up a larger share of your income as taxes. All
those earning P250,000 and below pay zero income tax, while those earning more than
P8 million pay as much as 35 percent. I will discuss this more in detail later.

The third reason for paying taxes is to correct for harmful behaviors that affect many
people (the technical term for this is negative externalities). For instance, a strong
argument can be made that factories spewing toxic chemicals should be asked to pay
taxes. These chemicals do not only pollute the environment but also pose health
concerns to people around the area. Imposing taxes on such activities can correct for
negative effects of some economic activities.

In short, we pay taxes to finance projects for the common welfare, to approach a fairer
society, and to correct for harmful activities. Keep these things in mind as we move
along.

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There are some characteristics of a good tax system. This will explain to you why we
need to reform the Philippine tax system to begin with.

The first characteristic we are looking for is a buzzword for economists - efficiency.
When we say a tax system is efficient, it means that it allows resources to flow into their
most productive uses. Next, we want the tax system to be administratively simple. A tax
regime that is difficult to administer will lead to loopholes and leakages on the part of
government. For taxpayers, it will also mean unnecessary costs like complicated
paperwork and even wasted time. We want to reduce these complications to a
minimum. The third characteristic we look for in a tax system is flexibility. Ideally, the
taxes imposed should adjust to the changing economic conditions like the prices of
goods and services. Fixed taxes have the tendency to be outdated once they no longer
reflect prevailing economic conditions. Fourth is fairness. When we say fairness, we
think of equity rather than strict equality. This means that those who have a higher
capacity to pay should pay more.

The importance and effects of TRAIN. When we speak of TRAIN, we are actually
talking about a series of packages to be proposed by the Department of Finance (DOF).
Ultimately, however, it is Congress that passes these laws because it is their job
according to our Constitution. TRAIN also reduces the exemptions in the Value-Added
Tax (VAT) system. When you buy food or clothes or whatnot, you will notice a 12
percent VAT amount in your receipts. We can see the VAT rates across different
countries as well as their respective VAT collections as share of GDP. With a higher
VAT rate, it should be normal that collections should also go higher. Evidently, the
Philippine VAT tax base has many exemptions and loopholes.

The Family and Income Expenditure Survey (FIES) in 2015 shows that the top 10
percent of households account for 51 percent of total fuel consumption. At the same
time, the richest 1 percent of households consume as much fuel as the poorest 50
percent of households. Again, the takeaway is crystal clear: it is the rich who consume
more fuel with their numerous cars and so forth. This is the fairness argument.Another
point that we take for granted is that petroleum products impose a cost on the
environment and to the health of people. We must take into account these costs to
correct for such behaviors. Raising taxes on petroleum products is one way of
protecting the environment. All these arguments justify the increased taxes on
petroleum, such that diesel taxes will go up to P6 per liter and P10 per liter on gasoline
by 2020. The argument for higher taxes on automobiles is similar to petroleum products.
It is the rich who have more cars.

The taxes for automobiles will also follow a progressive scale such that luxury cars will
be taxed more than regular cars. Here you can see that cars priced P4 million and
above will be taxed at 50 percent. On the other hand, cars that cost below P600,000 will

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be taxed at only 4 percent. Besides revenue and redistribution gains, it will also correct
for the traffic congestion costs that car-owners impose on the general public. The traffic
situation in Metro Manila is so bad, but we have to acknowledge that car owners
oftentimes aggravate the situation. You may have one car for one person, which is not
very space-efficient compared to say a bus or a train.

Last on the list are the taxes for sugar-sweetened beverages. It is primarily a health
measure which doubles as a revenue measure. It aims to curb the consumption of
sugar-sweetened beverages which contributes to the diabetes and obesity cases in the
Philippines while also raising ample revenues.

In closing, the TRAIN Law is a reform initiative that is crucial to the poverty-reduction
and economic development goals of the country. It amends an outdated, inefficient, and
unfair tax system while raising enough funds to enable the country to reach its potential.

For perspective, here are some of the things that the TRAIN Law can fund in the next
five years:

- 629,120 public school classrooms, or

- 2,685,101 public school teachers, or

- 60,483 rural health units, or

- 484,326 barangay health stations, or

- 1,324 provincial hospitals, or

- 35,745 kms of paved roads, or

- 786,400 kms of temporary bridge upgrades, or

- 2,665,763 hectares of irrigated land.

Imagine being able to accomplish any of these thingsStill, tax reform is not a walk in the
park. There will be winners and losers. What is important is that the gains outweigh the
losses, while simultaneously protecting the welfare of those who will be negatively
affected.

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Dear Respondents,
Good Day!
We, the students of College of Business Administration and Accountancy of Virgen Milagrosa
University Foundation are currently working on our business research entitled “R.A 10963 (TRAIN
LAW): Effects on consumption of sweetened beverages to the Filipino household in
selected barangays of San Carlos City”. In line with this, we would like to ask you to grant
our humble request by answering this questionnaire. This will enable us to gather
significant information in fulfilling our study.
It will be rest assured that whatever information we gathered will be used only
for business research purposes and be treated with uttermost confidentiality.
Your cooperation will be highly appreciated.

Personal Background

Name (optional): Status:

Address: Age:

Questions:

Directions: Please indicate your answer by checking the appropriate parenthesis.

1. How much is your monthly income?


( ) 5,000-10,000
( ) 10,001-15,000
( ) 15,001-20,000
( ) 20,001 and above
Others Specify: ___________
2. How much is your monthly expenditure allowance?

( ) 1,000-2,000
( ) 2,001-3,000

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( ) 3,001-4,000
( ) 4,001 and above
Others Specify: ___________
3. Does your level of consumption on goods affected upon implementation of
Republic Act 10963 or also known as Tax Reform for Acceleration and Inclusion
(TRAIN) Law?
( ) Yes
( ) No

4. How does the Republic Act 10963 or also known as Tax Reform for Acceleration

and Inclusion (TRAIN) Law affects your daily connsumption?

( ) increased

( ) decreased

5. How often do you buy sweetened beverages for a week?

a. Before TRAIN Law:

b. ( ) everyday

c. ( ) every other day

d. ( ) once a week

e. Specify: ___________

f. After TRAIN Law:

g. ( ) everyday

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h. ( ) every other day

i. ( ) once a week

j. Specify: _________

6. Does TRAIN Law encourage you to take care of yourself by consuming nutritious

foods and drinks?

a. ( ) Yes

b. ( ) No

7. Does the effect of Train Law to sugar sweetened beverages/products increased

your savings?

a. ( ) Yes

b. ( ) No

8. Does the Effect of Train Law to sugar sweetened beverages/products help to

asses wisely your needs and wants?

a. ( ) Yes

b. ( ) No

RESEARCH METHODOLOGY

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This chapter describes the methodology used for the descriptive survey research

study. This chapter presents the methods and procedures that will undertake in the

investigation of the study. This includes research design, locale of the study, sources of

data and preparation of materials, data gathering procedures and research that focuses

on the reliability and validity of the instruments, as well as the research study as a

whole.

Research Design

The study utilized descriptive method of research. Descriptive research involves

collecting data in order to test hypothesis or answer questions regarding the subjects of

the study. In contrast with the qualitative approach the data are numerical. The data are

typically collected through a Questionnaire, an interview, or through observation. In

descriptive research the investigator reports the numerical results for one or more

variables on the subjects of the study.

(Tendero Edwin V. et al 2010)

Sources of Data

This part presented the locale of the study and the population sampling.

Locale of the Study

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In this study, the researchers gathered the target population and conducted the

descriptive survey at Barangay Martin P. Posadas Avenue, Palaris street, Bonifacio

Street, and Padilla Street of San Carlos City Pangasinan. This will ensure the close

monitoring set-ups with constant assistance on optimum condition of the set-ups. With

this, yielding of favorable and reliable result will achieve.

Population Sampling

Quota sampling was used in the study. Quota sampling is a non-

probability sampling technique wherein the assembled sample has the same

proportions of individuals as the entire population with respect to known characteristics,

traits or focused phenomenon. The respondents are the households of different

barangays in San Carlos City, Pangasinan.

Table 1 shows the population sampling of the respondents.

Table 1: Population Sampling of the Respondents

Name of Barangays Total population of Number of Respondents

households

Martin P. Posadas 25

Avenue

Palaris street 25

Bonifacio Street 25

Padilla Street 25

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Instrumentation and Data collection

Several instruments for gathering data were developed and utilized in this study as

follows:

First the questionnaire on the profile of the respondents under profile name, age,

status and address.

Questionnaire. The structured survey questionnaire consisting of several questions

thet were developed and utilized by the researchers.

Second, are the questions regarding those effects on consumption of sweetened

beverages to the filipino household in selected barangay of San Carlos City,

Pangasinan.

Third, the researchers seek permission of the Dean of the College of Business

Administration and Accountancy to administer the test survey.

After formulating the desire questionnaire, based on the recommendations and

suggestions by our adviser and having permitted by Ms. Brendalyn M. Padlan to

conduct a survey. The researchers undergo several processes to make survey effective

with the following procedures.

1. The researcher floated the questionnaires to be answered by the respondents.

2. The respondents must first answer the profile and to be followed by several

questions.

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3. The test was checked individually by the researcher and the data will be

summarized.

4. Tabulated data was tallied, collated and subjected to data analysis using

suitable statistical tool.

Validation of the data instruments

With the help of the adviser, and the questionnaires were formulated. It was then

finalized and submitted for review, critiquing, and suggestions by adviser. The

suggestions and comments were then assimilated in final drafting of the survey

questionnaires, after which instruments were subjected to evaluation by language

experts on materials preparation, in terms of content, form, and style before their

reproduction, and administration to all respondents.

Tool for Data Analysis

Desriptive statistics, including percentages for all nominal and ordinal data was used.

Weighted mean was utilized to gather the average value to describe the effects on

consumption of sweetened beverages to the filipino household among San Carlos

citizen. Significance for all statistical measures was determined at the 0.05 level.

Frequency Count and Percentage The profile of the respondents shown in figures are

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entered into tables to determine its frequency count and percentages using the following

formula:

%=f/n ×100

Where:

% = percentage of the respondents

f = frequency of the respondents

n = total number of the respondents

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