TRAIN LAW

Related Local Studies

http://ilsdole.gov.ph/technical-learning-session-on-the-tax-reform-for-acceleration-and-inclusion-train-law/
According to Institute for Labor Studies in December 2017, R.A. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) was signed into law by President Rodrigo
Duterte. The current administration envisions that this priority agenda will correct certain deficiencies in the current tax system in order to make it simpler, fairer, and more
efficient. Revenues to be collected from this initiative will be used to support the government’s infrastructure, education, and health programs, which in turn will propel poverty
reduction efforts. In 2016, the Department of Labor and Employment (DOLE) bared its 8-Point Labor and Employment Agenda. The first item in the Agenda is to continuously
enhance and transform DOLE into an efficient, responsive, purposeful, and accountable institution. In line with this commitment, it is vital for the Department to understand and
critically analyze TRAIN in order to identify its impacts on the Filipino workers and come up with relevant adjustment measures. As a way forward, the Institute for Labor Studies
(ILS) organized a technical learning session on TRAIN to introduce the components of the law, and to help the Department in crafting guided and informed policy options and
strategies. The activity drew the participation of senior officials and heads of office and representatives from different bureaus, services and attached agencies of the DOLE.

Related Local Literature

The TRAIN law and the poor
BYANTONIO P. CONTRERASON JANUARY 30, 201

https://www.manilatimes.net/train-law-poor/377248/
According to ( Contretras 2018), there is no doubt about it. The Tax Reform for Acceleration and Inclusion (TRAIN) Law shifts the tax burden away from income and into
consumption. The law reduces the income tax burden of the earning Filipinos, recalibrating the brackets with the intention of increasing the disposable income after taxes. The
theory is that increases in disposable income can spur consumption. This will not only drive growth, but also generate government revenues where the taxes are now shifted to
the consumption of goods and services.
While the law targets specific goods, such as sweetened beverages and vehicles, it also has increased the taxes for fuel. We know that the latter would lead to increases not only
in transportation costs, but will have an effect in the prices of practically all commodities.
The idea is that whatever is lost in tax revenues from personal income is compensated by the taxes on the purchase of goods and services.
One could argue that the taxes on vehicles would have positive environmental benefits, even as the taxes on sweetened beverages would have positive health benefits. In
addition, one can also argue that taxes on vehicles will only affect the upper classes, and not the poor.
However, the fuel taxes will have an effect that will cut across income classes. And for the poor, this would even be costlier, since their pre-TRAIN levels of earnings, if any, are
not taxed anyway, and hence any change in the tax rates would not have an effect in their disposable incomes. Thus, any increase in prices of transportation fares and
commodities will certainly hit the poorer classes of society harder.
This is precisely why there is a subsidy component to the TRAIN Law, which is going to be implemented by the Department of Social Welfare and Development (DSWD) through
the unconditional cash transfer (UCT) program.
Under UCT, households which qualify will be given a monthly cash grant of P200 in 2018, and P300 in 2019 and 2020. It is estimated that about 10 million Filipino households
and individuals who belong to the poorest sector of the country will benefit from this program.
At the end of the month, the DSWD is scheduled to begin handing out a lumpsum of P2,400 to the qualified beneficiaries. For 2018, a total of P24 billion has been earmarked for
the implementation of the UCT in the 2018 General Appropriations Act. The funds are now deposited with the Land Bank of the Philippines.
The first to receive the cash grant are the 1.8 million household beneficiaries of the PantawidPamilyang Pilipino Program (4Ps) with cash cards who will receive these by
tomorrow, January 31. The remaining 2.6 million 4Ps beneficiaries without cash cards will receive theirs at a later date.
Also included in the UCT are the three million indigent senior citizens who are currently also beneficiaries of the DSWD Social Pension Program which is implemented in
partnership with their respective local government units (LGUs). They will receive their cash grants by the end of March 2018.
The remaining 2.6 million households will then be chosen from the DSWD Listahanan, or National Household Targeting System for Poverty Reduction (NHTS-PR). A validation
process will be conducted and is expected to last for three months. DSWD plans to finish the process by May so that the cash grants will be distributed to the qualified
households by the end of June.
Key to the success of this component of the TRAIN Law is the effectiveness and efficacy of its implementation. The DSWD is now in the process of finalizing the implementing
guidelines. Included in the guidelines are the terms of partnerships with Land Bank and other financial institutions. A program management office will be established within the
DSWD to oversee payroll generation, beneficiary validation and the release of the funds to the beneficiaries.
Unlike the 4Ps, which is a conditional cash transfer where the disbursement of the cash grant is contingent on some conditions, such as enrolling children in school, the UCT is an
outright subsidy given by the State to the poor to shelter them from the shock of increasing prices despite unchanging low levels of income which is expected as an effect of
TRAIN.
Outright subsidies are always a double-edged sword. They provide a stopgap measure for families which are adversely affected, hoping that the cash grants will compensate for
the increases in household expenditures due to rising prices of commodities.
However, the strategy of giving a lumpsum of P2,400 to a household, without the rudimentary consciousness to save, could lead to the possibility that the amount may end up
being quickly spent, and hence its effects would not be felt to be spread out over the entire year. Another concern is whether the amount is enough to cover the increases in the
prices of goods. The subsidy appears to be also insensitive to household size, which is in fact a primary factor in determining whether the amount would be sufficient.
The TRAIN law is banking on the economic growth that will be generated by the infrastructures to be built and whose funds will be drawn from the tax revenues, as well as from
foreign development assistance whose release is premised on the approval of the TRAIN law. It is also hoped that the so-called “Build BuildBuild” initiative will generate demand
for construction-related work.
However, one should also bear in mind that aside from the employment benefits that may result from the infrastructure rush, which could not even accommodate all 10 million
households, there is no assurance that the aggregate growth of the economy resulting from infrastructure development will indeed trickle down to the poor.
Direct subsidies can at best provide quick palliatives. The long-term solution is to invest not only in physical infrastructures, but also in social infrastructures that could transform
the poor from passive recipients of cash grants, into becoming active and viable economic actors.

Related Foreign Literature

https://www.dof.gov.ph/taxreform/index.php/2017/12/13/2422/
Posted on December 13, 2017 by DOF Tax Reform

According to Department of Finance Tax Reform (2017) leaders of foreign business institutions and Cabinet officials have reiterated their support for the Tax Reform for
Acceleration and Inclusion Act (TRAIN) as a key factor in transforming the country into an investment-led economy that truly benefits the poor and grows a strong middle class.
Julian Payne, the president of the Canadian Chamber of Commerce of the Philippines, said the TRAIN will benefit people with “lower-level incomes” and make the tax system
more progressive
“We applaud the administration for taking the initiative and embarking upon this major effort. We definitely support the fact that [TRAIN] will maintain a responsible fiscal
framework that will include funding for the public sector, for fiscal and social infrastructure, which will benefit the poor as well,” said Payne, who represented the Joint Foreign
Chambers of the Philippines (JFC) at one of the earlier hearings of the Senate ways and means committee on the proposed tax reform bill.
The Senate ways and means committee began the deliberations on the TRAIN, which was filed in the chamber by Senate President Aquilino Pimentel III as Senate Bill (SB) No.
1408, last March 22. The Senate began conducting plenary debates on the revised measure, SB 1592, on Nov. 22 and finally approved it with substantial amendments last Nov.
28.
Meanwhile, House Bill (HB) No. 5636, is the TRAIN version approved by the House of Representatives last May 31.
The bicameral conference committee tasked to reconcile the conflicting versions of the House and Senate versions of the TRAIN began its meeting last Dec. 1. It is expected to
wrap up its final report this month.
Finance Secretary Carlos Dominguez III has expressed hopes that the bicameral conference committee could submit its final reconciled version of the TRAIN to Malacanang by
the second week of December so that President Duterte could sign it into law before the Christmas holidays, in time for its publication before the end of the year and its
effectivity by Jan. 1.
Payne said the JFC is also backing “the intended reduction in corporate and personal income taxes in the sense (that it will make us) competitive with our ASEAN neighbors” and
develop a business environment that will encourage foreign investors.
Wayne Bradford, a senior advisor of the International Tax and Investment Center, commended the Department of Finance (DOF) led by Secretary Carlos Dominguez III for its
thorough work on TRAIN, which “is generally consistent with important economic principles that guided most tax reforms worldwide.”
“It aims to lower marginal tax rates for most taxpayers. It broadens the tax base and attempts to simplify the system that is covered in your tax bill Package One,” said Bradford.
He said the Center also fully supports “the DOF’s original (proposed) petroleum tax increases” as well as the fuel marking and other activities that aim to combat oil smuggling.
The TRAIN, which aims to slash personal income taxes and raise additional revenues for the government’s unmatched spending program on infrastructure and human capital
development, has also garnered the support of the local business sector and civil society organizations.
Secretary Ernesto Pernia said at the same hearing that implementing the TRAIN will benefit the economy with “an increase of 1.4 percent” GDP growth per year and generate
1.1 million new jobs as this measure would help support the government’s massive infra program.
“I think that’s going to be a big boost to the economy in general. Also in terms of employment generation, many of these beneficiaries of additional employment will be the
poor,” Pernia said.

https://businessmirror.com.ph/train-law-estate-tax-and-possible-implications/
TRAIN law: Estate tax and possible implications
By Atty. Jose Emilio M. Teves -January 25, 2018

According to ( Teves 2018) previously, the National Internal Revenue Code provided a table of rates that the estate of a decedent would pay if the value of the net estate met a
certain threshold. To get the value of the net estate, we would subtract the deductions allowed by law from the gross value of the estate.
For instance, if the net taxable estate’s value was over P10 million, it would pay the amount of P1,215,000 plus an additional rate of 20 percent for the excess of P10 million.
Thus, if the value of net estate is P11 million, the estate shall pay P1,215,000. An additional P200,000 shall be imposed, which is the 20 percent of the excess of P10 million. The total
amount would be P1,415,000.
The Tax Reform for Acceleration and Inclusion (TRAIN) law has simplified the computation of the net estate tax. There is no longer a table or graduated rates. The estate tax is now
fixed at 6 percent of the value of the net estate. So, using the previous example of P11 million, the estate tax shall be P660,000.
The TRAIN law has simplified deductions, as well. Originally, there were two categories of deductions: ordinary and special. These two categories were composed of several other items,
most of which required proof through official receipts and the like. Further, the allowable deductions were subject to limitations that were cumbersome to derive.
Broadly speaking, the TRAIN law provides for three types of deductions.
There is the standard deduction of P5 million. This amount is an increase from the original, which was P1 million. The value of the family home is another deduction, the amount of
which is capped at P10 million. This is another increase. Before the amendment, such deduction was pegged at P1 million. If the value of the family home exceeds P10 million, the excess
would be subject to estate tax. The final deduction shall be the debts of the decedent.
The fact that the P5 million is considered as a standard deduction is a boon for many Filipinos. Since it is a standard deduction, there is no need to substantiate the same with receipts—it
can be automatically claimed.
An interesting situation arises regarding bank deposits of decedents. Originally, the heirs could only withdraw up to P20,000 from the deposits. The TRAIN law has removed that cap,
but the amount withdrawn would be subject to a final withholding tax of 6 percent.
Now, this situation could arise: What if the amount of the net estate tax due, after deductions, was zero or less than the amount subjected to final withholding tax? Such a situation would
be possible and there may not be a tax liability in the first place if the gross estate and deductions are considered. The advanced deduction from the final withholding tax prejudices the
estate of the decedent when it should not. In effect, the withdrawn amount of deposit is taxable by itself, regardless of the net estate of the decedent.
How should this be resolved? The author is of the opinion that, instead of a final withholding tax, it serves the purpose of the TRAIN law better if it is a creditable withholding tax. This
is so that the withheld amount could still be utilized against the tax imposed on the net estate and, perhaps, refunded if there is excess. Such change in treatment, however, would require
an amendment and not a mere implementing regulation.
There are, however, other peculiarities in this final withholding tax approach that may be clarified further through the implementing rules and regulations (IRR). The requirement is to
impose a final withholding tax on the withdrawn amount. Should all withdrawals from a deposit account, where a decedent is the depositor, a joint or a codepositor, be subject to the 6-
percent final withholding tax? In a joint account, for example, the surviving depositor may actually be withdrawing his own share from the joint deposit. Would that still be subject to a
final withholding tax? Also, even in a case where the sole depositor is the decedent, it is possible that the deposit is considered part of the conjugal assets where the surviving spouse
owns a part of it. The withdrawn amount may pertain to the share of the surviving spouse. Would that still be subject to a final withholding tax? While these are not clear in the TRAIN
law, perhaps these instances can be clarified by the IRR, as it may not have been the intention of the law subject to final withholding tax deposits that are not part of a decedent’s estate.
The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of WTS Global.
The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or
legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at josemilio.teves@bdblaw.com.ph, or call 403-
2001 local 150.

Related Foreign Literature

http://www.bworldonline.com/critique-uap-studies-tax-reform/
Yellow Pad
By Madeiline Aloria and Joshua Uyheng

According to ( Aloria and Uyheng 2017) with House Bill 5636 or the Tax Reform for Acceleration and Inclusion (TRAIN) well underway at the Senate Committee on Ways and
Means, it is crucial to take stock of the studied and evidence that have been presented to lawmakers, and scrutinize their relevance in light of recent developments.
This includes the two industry-commissioned studies by the University of Asia and the Pacific (UA&P), which support an adjusted schedule for the fuel excise tax and a
reconsideration of the tax on sugar-sweetened beverages. Though their proposals look sound attractive, comprehensive, and economically sound on the surface, the more than
200-page pair of studies belies major gaps and biases in the analysis that threaten to weaken the most progressive provisions of TRAIN.
A SLOWER BURN FOR FUEL EXCISE?
Despite natural growth in people’s nominal income, gasoline and diesel excise taxes remain unadjusted at P4.35 and P0.00 since 1997. These unadjusted rates have resulted in
about P140 billion in annual forgone revenues, and made our tax system less progressive by favoring the richest 10% of Filipino households who consume 50% of fuel in the
economy. To correct this, the DoF proposes an increase of at least P6 per liter.
In TRAIN, the proposed increase is staggered to P3 in 2018, an additional P2 in 2019, and a final P1 in 2020. By the first year, about P74 billion will be generated to fund
infrastructure, health, education, and social protection measures. Under this proposal, independent estimates show an increase in annual direct expenditure for gasoline, diesel,
kerosene, LPG, and lubricant expenditures totaling only P76.06 for the poorest decile while increases in commuting costs will only total P39.8 — both of which will be more than
covered by the proposed cash transfers worth P2,400 annually per qualified household.
In contrast, the UA&P recommends an adjusted schedule of P1.75, P2, and P2 over the same three-year period. The idea seems attractive, since by the end of three years the
results seem comparable to the original proposal (P6 vs. P5.75). However, this proposal arises from the UA&P estimate using 2012 data, claiming that TRAIN will increase the
fuel expenditure of the first decile annually by P1,076. This projection is questionable, given that the first decile’s annual total fuel expenditure does not even reach P500,
according to the 2015 Family Income and Expenditure Survey.
Moreover, the UA&P proposal comes with very crucial caveats.
Alongside the lowered rate of P1.75 in the first year, the paper proposes that the threshold for personal income tax (PIT) exemption be lowered to P150,000, rather than the
threshold agreed upon both in the House of Representatives and the Senate, which is at P250,000 year. They later on assume the feasibility of a cash transfer worth P3,600 — an
amount that was only proposed to match the original DOF proposal of a P6 increase.
The first problem with the watered down fuel excise is that it isn’t viable without drastic adjustments to the other aspects of TRAIN. Lawmakers will be hard-pressed to change
the PIT exemption threshold, not to mention that the cash transfers are supposed to come from 40% of the incremental revenues from the fuel tax. The P1.75 rate is nowhere
near enough to fund the transfers, let alone any new government programs.
Second, as the diluted fuel excise tax increase threatens the implementation of the cash transfers program, UA&P’s proposal is poised to benefit more the rich (who has
guaranteed gains from income tax cut), than the poor, making TRAIN less progressive.
A SUGAR-FREE TRAIN?
House Bill 5636 also proposes a P10/liter tax on sugar-sweetened beverages (SSBs). By raising the price on SSBs, the tax aims to reduce excessive sugar intake, which has been
linked to obesity and life-threatening diseases like diabetes. Revenues from the SSB tax will be earmarked for programs to prevent noncommunicable diseases, feeding
programs, support for potable water, and support for alternative livelihood programs of sugar-producing regions.
In its analysis, UA&P calculates economy-wide multiplier effects for various interrelated industries, and shows the bill’s potential adverse impact on beverage sales and
subsequently on direct and indirect employment. It demonstrates an appreciation for wider-scale impacts of the tax, but they do so unfairly.
First, the UA&P study claims that the gains from SSB revenues, which it estimates at about P38 billion, will be eroded to only P8 billion due to decreased VAT and CIT revenues
arising from decreased sales. However, they solely account for decreased VAT and CIT from decreased beverage sales, but completely neglect households’ increased spending
(perhaps on other goods) that will result from the increased disposable income all deciles will receive from the cash transfers and the PIT relief. This now increases VAT and CIT
revenues from other goods.
Assuming, without conceding, the net P8 billion from SSB tax is correct, there is still clear concession on the part of UA&P that the government revenues stand to be much bigger
than current estimates already stand.
Note that based on the country’s experience, excise tax is among the most efficient tax to administer, with 95% of the target collections met on the average. While the UA&P
wrongly presents a tug-of-war among the three, in the lens of equity and revenue generation, introducing excise tax is a complement to VAT and CIT given the fact that they
result in collections equivalent to only 40 to 50% of their supposed amounts, respectively.
Second, the UA&P study uses the notion of multiplier effects as an economic strawman, portending crippling losses to the economy due to impact on industries, but
conveniently ignoring the potential welfare investments from additional government financing for education, health, infrastructure, and social protection. Not to mention it will
benefit businesses that often complain of the complexities in the tax system, an issue that tops the list of deterrents to business growth in the country. In short, the study only
pretends to be comprehensive but only to the extent of shoring up certain interests.
Finally, the UA&P study totally forgets the provision’s health impacts.
As former Secretaries of Health and numerous medical associations have pointed out, the SSB tax will have direct effects like reduced sugar consumption to curb obesity and
reduce top noncommunicable diseases like diabetes, as well as indirect effects like funding nutrition programs to help the undernourished.
Excessive sugar intake also has economic impacts in terms of health costs, productivity costs, and plunging vulnerable families into poverty. Alleviating these will have their own
multiplier effects that benefit all, especially the poor and near poor.
ROUNDING THE FINAL STRETCH
As TRAIN enters its last few sessions with the Senate Committee on Ways and Means, it is important to focus the discussions where they matter most in light of ever-evolving
evidence.
For the fuel excise, by keeping the current proposal’s P3 increase in the first year, lawmakers will be able to keep both the PIT exemption and a cash transfer of P2,400 for the
poorest 50% of households, all while generating substantial revenue for public transportation, universal health care, and other programs in the pipeline. What matters is
whether they will receive the promised income tax relief and cash transfer, which will more than offset inflationary impacts. This is achieved in the P3 case, not the P1.75 case.
As for the SSB tax, by considering a big picture that seriously accounts for its health impacts and complementary measures, a sweet spot may certainly be found. The dichotomy
the UA&P study draws between health and the economy is a specious one: first, because health itself is a precondition for a growing and equitable economy, and second,
because their economic calculations themselves are incomplete and hence biased.
For a truly progressive tax reform, the evidence on the table must be rigorous, comprehensive, and up-to-date. More importantly, they must approach the tax reform
objectively, with the people’s welfare in mind. As TRAIN rounds its final stretch, it cannot risk compromising its key features based on arguments well past their prime; the TRAIN
has already left that station.
MadeilineAloria and Joshua Uyheng are researchers of Action for Economic Reforms
www.aer.ph

JEEPNEY
Related ForeignLiterature
http://bizresearchpapers.com/Paper-6new.pdf
Jeepney as an informal sector (Silock, 1981) with its flexibility and dynamism, and unhampered by the regulations that govern the formal sector offers a new concept
in development without having to face the hurdles that are inherent in the organized sector. This creates space for a rapidly increasing class of entrepreneurs with
limited resources who find the unofficial system of functioning related to their own methods. The informal Jeepney industry is often described as a low productivity
backwater “sponge” absorbing those who cannot find productive employment in formal urban activities but in reality it generates more jobs and income per vehicle.
The social role of Jeepney businesses is the setting-up of a Micro, Small and Medium sized (MSM) enterprise offers an outlet for those individuals who for whatever
reason have been unable to find work in, or have been forced to withdraw from the formal labor market. And MSM enterprise is the natural route for the talents of
all artists to find their expression. The Jeepney business provides a productive outlet for the energies of that large group of enterprising and independent people who
set great store by economic independence and many of whom are antipathetic or less suited to employment in any organization but who have something to
contribute to the vitality of the economy. Jeepneys can be produced with skills and limited resources that are locally available, making them an appropriate and
sustainable form of technology. It is more than just a mover of people and goods. It is a major provider of jobs and income. Large numbers of people are employed or
self-employed as drivers, conductors, mechanics, traffic policemen, and transport administrators while in addition, there is a host of transport-related businesses:
assembly plants, repair workshops, filling stations, warehouses, and motor insurance companies. Jeepney factories are important employers of skilled labor
(engineering, craftsmen) and many, as a result of their labor intensity, may help to maintain a skilled labor base in an area or in an industry while larger routine semi
and unskilled work is being provided in large companies. In a period of economic depression many unemployed people may go into self-employment to tide
themselves over until new employment opportunities develop. Jeepney industry is capable of contributing to the formation of material capital. In doing so, it taps
sources of capital which would not be tapped by large companies or by any means other than independent entrepreneurship. These sources include the proprietor’s
own funds, re-invested earnings, or borrowings from relatives and friends. Some of these funds come from commercial income and from land revenues of the
proprietor, his family and his friends. Some are built up by the extra hard work and the abstinence which a personal, independent enterprise very often motivates.
Jeepney industry forms various inter-linkages, they enter into with local suppliers and traders, which they share a common social and cultural background that helps
to strengthen the local sense of community. Sustainability can be defined as a state wherein all sectors concerned or affected by the Jeepney industry can continue to
receive positive benefits from it (Grava, 1972): Users: Net benefit = (Better service, comfortability, safety, etc.) – fare Drivers: Net Income = Revenue- (Boundary Fee +
Operating cost + Fuel) Operators: Net Income = Boundary Fee – (Fixed cost + Maintenance cost) Factories: Net Income = Price – Production Cost Jeepney attributes as
a public transport vehicle: (1) Speed - the ability to convey the user to the destination within a reasonable time; (2) Load Carrying Capacity - the capability to carry the
user and all his loads; (3) Reliability – the ready availability at whatever time and place required; and (4) Cost – the capability to render required services with
reasonably low total (initial and operating) costs. A large number of routes directly link origins and destinations to provide almost door to door services that were
made possible due to the intermediate size capacities of the Jeepneys (Iwata, 1983). It make poor neighborhoods more accessible – those who are too poor, disabled,
young or old to own or drive a car are effectively left out many of the society’s offerings, curb-to-curb service, passenger in all walks of life can enjoy a low fare, and
24/7 public transport system which operate even late at night, when nothing else will take a drunk man home are among the next best thing. Poverty limits access to
transport, and this greatly increases the burden in time and effort of the poor to acquire their everyday needs. Time taken up in transporting basic necessities in turn
reduces the effort that could be put into more productive activities. Jeepney as a means of transport can therefore bring substantial benefits to the poor by giving
them opportunity to become more productive and by removing some of the restrictions on economic development. There are, therefore, many opportunities to
improve transport for the poor by introducing Jeepney (basic technologies) into regions where they are at present not found and improving and adapting them in
other areas where they are not used effectively. For many products and processes there are positive advantages of Jeepney business existence, among them is
flexibility in adapting to the buyers’ wants, more personal relations with workers and customers, less need for a complex organization and for the highly trained
manpower required to run such organizations, and lower overhead costs. Some of these factors that weigh on the side of small scale units are particularly important
in newly developing countries, where the cultural environment is not yet as well suited to impersonal, complexly organized activities as in the countries with longer
experience of industry. Jeepney is a symbol of Filipino ingenuity (Torres, 1979) that’s why it made the Philippines unique from others, it builds its own identity. So
Jeepneys are known by foreigners and tourist as truly Filipino expression. So Filipino should be proud of the machine that truly changed the Philippines in the eyes of
a stranger. It is the loader of anyone and anything, and always available anytime and anywhere. For other kind of transport system, do they allow what the Jeepney
does like loading live pigs, chicken, fresh meats, wet market products, coco lumber, cements, steel pipe tubing, bulk of vegetables and fruits, sacks of rice etc. and do
they allow cargoes and passengers on the roof top or hanging on the sides. Nothing can beat the practical usefulness of the Jeepneys in the Philippine’s livelihood and
their willingness to operate even late at night.

Related Local Studies

https://aboutphilippines.ph/documents-etc/Jeepney-Specifications-Braganza-Liwanag-Palines.pdf
The Characterization of Jeepney Vehicle In Metro Manila study (Colos, 2005) aims to define the important aspects of a jeepneys vehicle to be able to establish
standards in its assembly methods. These aspects include the specifications of the jeepneys used, frame materials and construction methods, and the overall
dimension of the jeepneys vehicle. This study only provides basic information on important aspects of jeepneys vehicle, which will serve as a database for the
specification of the jeepneys for future studies and standard formulation. As of the moment, jeepneys design can be customized based on the specifications and
directions of the costumer. And though the product outcome is not high in technology, it is very cheap and useful to many people.

https://aboutphilippines.ph/documents-etc/Jeepney-Specifications-Braganza-Liwanag-Palines.pdf
The Development of Standards for Low-Cost Motorized Road Vehicles in the Philippines Study (UP NCTS, 2005) concept paper tackles about the lack of proper policies
and standards for the road vehicles in the Philippines. As far as LCMRVs are concerned, there is no definite policy that directly addresses the issue of vehicle
standards. Policies on road safety have been established even in an ASEAN level, but in the case of locally made vehicles, there is no rule on how a jeepney or AUV
should be constructed to ensure safety for the driver and other road users. The registration procedures of the Land Transportation Office (LTO) of the Department of
Transportation and Communication (DOTC), is using parameters that are too general, and sometimes are not very useful as reference. LCMRVs usually fall under the
“Utility Vehicles” classification, which covers a number of other vehicles of different configurations like jeepneys, AUVs, vans, small trucks, and commercial vehicles
among others. With the lack of standards on LCMRVs, configurations vary widely because the local assemblers are able to integrate vehicle parts on almost any
vehicle assembly even if they do not match. Proper regulations thru policies or standards can help improve the local vehicle manufacturing industry. This is where
researchers and technocrats play a major role in improving the way mandates are carried out in the government.

file:///C:/Users/EPC-20/Downloads/Jeepneyspdf.pdf
Research conducted on Filipino values can be classified under etic studies, that is, following the cross-cultural psychological tradition, and emic/indigenous studies,
that is, following the culturalpsychological/anthropological tradition. Under a cross-cultural perspective drawn from Hofstede (2001), Filipino values can be
characterized as high collectivism (preference for acting as group members rather than as individuals), very high power distance (degree of acceptance of inequality),
low uncertainty avoidance (preference for unstructured rather than structured situations), high masculinity (preference for values such as assertiveness and
performance over those of warm personal relationships and service), and high short-term orientation (opposite of a long-term time orientation that stresses
Confucian values like persistence). Hofstede’s assignation of values was validated by Acuña and Rodriguez’s (1996) study of Filipino managers. Javidan and House
(2001) characterized the Philippines as very high on humane orientation, meaning that Filipinos try to avoid conflict in conversations and are caring and supportive.
Smith, Peterson, and Schwartz (2002) combined data from several value surveys and characterized Filipinos as high in power distance and conservatism, i.e., showing
preference for the immediate circle over outsiders, maintaining the status quo, and loyalty towards one’s boss. Similarly, Inglehart and Baker (2000), in a study of 65
countries, characterized individuals from the Philippines as having high traditional (religion, national pride, and obedience to authority) and survival (economic and
physical security) values. These studies compared Filipino values with those of people from other countries; however, psychologists favoring an indigenous approach
criticized cross-cultural studies for imposing Western psychological concepts. Indigenous psychology derives ‘psychologically relevant concepts that were not
developed in mainstream Western psychology, but in cultures being studied, thus also reflecting the particular way of thinking inherent in these cultures’
(Friedlmeier, Chakkarath, & Schwarz, 2005, p. 2). Indigenous psychologists (e.g., Marcelino, 1990) seek to understand Filipinos’ key values and their culture’s nuances.
They argue for an approach that utilizes Sikolohiyang Pilipino (Filipino psychology), a framework within which to understand, in a non-Western context, the Filipino’s
mind, personality, and behavior (Marcelino, 1990; Pe-Pua & Marcelino, 2000). Virgilio Enriquez (1993), who is known as the initiator of the Sikolohiyang Pilipino
movement, and Felipe Lande Jocano (1997) identi- fied and described many Filipino principles and values in the national Tagalog language. For Enriquez, the Filipino
self is not an independent unity, but an interconnected unity with the selves of others or with the kapwa (the other). Thus, the Western concept of collectivism only
captures a small aspect of kapwa. Among the more frequently mentioned values according to Enriquez (1977) and Madigan (1972) were pakikisama (favoring smooth
interpersonal relations), utang na loob (honoring debt of gratitude), and bahala na (determination in the face of uncertainty). These translations are only
approximate, as the essence of the Tagalog terms cannot be captured completely in English. The description of emic and etic studies on Filipino values shows that
both approaches identify quite different relevant Filipino values and respectively possess certain strengths and weaknesses.

Related Foreign Studies

http://cleanairasia.org/wp-content/uploads/2017/04/Jeepney-CB-Study.pdf
Based on the 2015 GIZ study which surveyed 36 driver-operators in Metro Manila, the majority of the driver-operators were found to be between 30 and 60 years
old, and were able to finish high school. Twenty-eight percent were aged below 40 years, and were at least high school graduates. Thirteen percent had some college
education, while 5.6% were technical-vocational course graduates.
Most of the survey respondents had household sizes from three to seven members, with 5.19 the average. This provides an indication of the number of people
dependent on the sector. It is reported that the minimum income required for a family of five to live decently is PHP 28,00021 a month. Based on previous survey
results, a driver-operator could easily earn this amount. For an operator leasing his/her vehicle, at least two to three units would be needed to earn the minimum
income for a family of five. This may be true only if the vehicles are free from amortization payments and may not be true if the operational savings provided by the
acquisition of new vehicles is not enough to pay the loan dues. In such a case, funds originally allotted for family expenditures would have to be diverted to finance
the deficit. While this may not be a problem for the 22% of the households that receive between PHP 10,000-25,000 additional cash flow from other sources, this will
not be feasible for most of the sector.22 This would be especially difficult for those with outstanding loans. Thirty-nine of those surveyed had loans between PHP
3,000 and PHP 120,000, with the average PHP 40,000. Raising the equity required to match the loan amount is another issue. Only three of those surveyed indicated
they had some savings. A review of the assets owned indicated that 70% owned their homes, 36% owned some land in the province, and 22% owned at least one
motorcycle. It is unlikely that the operators will be willing to have their limited assets be put up as loan collateral due to the risk of losing them. Considering their
limited access to formal financing sources, it is not surprising that 32 of those surveyed acquired their vehicles by cash payment. Ninety-two percent of the units were
secondhand when acquired at an average price of PHP 300,000. Non-cash acquisitions were primarily made through monthly payments jointly agreed with the
previous owners.

Related Local Literature

http://newsinfo.inquirer.net/939381/jeepney-drivers-urged-to-form-cooperatives
Jeepney drivers urged to form cooperatives

According to (Yee and Nonato 2017) operators should form cooperatives and consortiums so they can acquire at least 10 new jeepneys offered at P1.4 million each under the
government’s public utility vehicle (PUV) modernization program, transportation officials said at the House of Representatives on Thursday.
Their suggestion was in response to public transport groups’ worries about the high amortization rates for the purchase of new PUV models that would cut into the meager
income of drivers and operators.
Martin Delgra III, chair of the Land Transportation Franchising and Regulatory Board (LTFRB), told the House committee on transportation that in any other business, the cost
could be effectively managed “if you’re going to consolidate.”
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Gov’t subsidies
The government will provide subsidies of up to only P80,000, despite each “modernized” jeepney costing about P1.4 million.
An LTFRB board member, Aileen Lizada, said that as borrowers, operators must be a legal entity “so the bank will have confidence in them.”
The loan facility of state-run Development Bank of the Philippines (DBP) assumes the PUV operator as a “profitable cooperative” and the drivers are salaried employees to
cushion them against the amortization cost, said DBP first vice president Paul Lazaro.
The Federation of Jeepney Operators and Drivers Association of the Philippines (Fejodap) objected to forcing operators to merge their businesses.
Fejodap national president Zenaida Maranan said many operators were drivers who owned a single vehicle, or were overseas workers who had no knowledge of managing a
“fleet,” as required under the modernization program.
High interest rates
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Melencio Vargas, president of the Alliance of Transport Operators and Drivers Association of the Philippines, said state banks should at least lower the interest rate from 6
percent to 3 percent “if the government really wants to help us.”
George San Mateo, president of the PinagkaisangSamahan ng mgaTsuper at Opereytor Nationwide (Piston), said the modernization program would “massacre” the livelihood of
drivers and operators, and burden commuters with fare increases.
Piston staged a nationwide strike on Oct. 16 and 17 to protest the modernization program, which will phase out jeepneys that are at least 15 years old.
The program is expected to affect 270,000 jeepneys and around 650,000 drivers nationwide, according to the Crispin B. Beltran Research Center.
Delgra said fare increases would encourage drivers and operators to take part in the modernization program, as these would cover losses, inflation or fuel price increases and
serve as an “incentive to move forward to modernization.”
The committee chair, Catanduanes Rep. Cesar Sarmiento, said that “rather than focusing on moving people and goods,” the country’s transport system was being operated to
sustain the livelihood of drivers and operators.
Delgra said, technically, there was no “phaseout” because “the jeepney will remain” as a mode of transportation. But he said operators would need to replace existing vehicles
with ones that “meet the national standard.”
Manufacturers
Delgra named Santa Rosa Motor Works, Almazora Motors, Centro Manufacturing and Francisco Motor as among the local manufacturers that had expressed interest in
supplying the new models.
Lawmakers assailed the lack of a clear time frame for the replacement of old jeepneys, with many of them pointing out that President Duterte said in a rant against Piston that
he wanted them out of the streets by Jan. 1.
“January, if you’re not modernized, get out! You’re poor? Son of a bitch, then suffer in poverty and hunger, I don’t care!” said Mr. Duterte, who had styled himself as a propoor
candidate during last year’s election.
The President’s “paranoid rant” against those protesting the phaseout of old jeepneys has a “chilling effect” on
the public, according to the opposition coalition Movement Against Tyranny.
Delgra told lawmakers that Mr. Duterte’s pronouncement of a January deadline was only “an expression of an urgency to push this as firmly as we can.”
Pilot testing
Delgra said three routes would be pilot-tested before the end of the year: a route from Rizal province to Manila, one in Makati City and another in Pateros.
Before the modernization of jeepneys is implemented, routes will have to be “rationalized” first to identify which have exceeded their capacity and which have underserved
demand. Delgra said this would take place “[in] the first quarter of next year.”
Once 26 motor vehicle inspection systems (MVIS) have been set up nationwide, the Department of Transportation can follow through Mr. Duterte’s order to do away with old
jeepneys, according to Transport Undersecretary for Roads Tim Orbos.
The MVIS checks whether a vehicle is roadworthy. Currently, there are eight centers nationwide that can check a vehicle’s roadworthiness.
Should a jeepney fail the test, Orbos said this would no longer be allowed on the road. —WITH A REPORT FROM NIKKO DIZON

Profit
Related Foreign Studies
http://eureka.sbs.ox.ac.uk/4689/1/WP1303.pdf
The Taxation of Foreign Profits: a Unifiied View Michael P.Devereuxy , Clemens Fuestz , and Ben Lockwoodx April 2013

Desai and Hines (2003, p. 496) for the most part assume that domestic capital stock is una§ected by foreign acquisitions, corresponding to our special case of
unlimited management capacity6 . In this case, they have three claims. First, they claim that national optimality requires exemption: íNational welfare is maximized
by exempting foreign income from taxation in cases in which additional foreign investment does not reduce domestic tax revenue raised from domestic economic
activity.í (Desai and Hines, 2003, p. 496). Second, they claim that exemption is also sufficient for global optimality, i.e. CON: "CON is satisfied if all countries exempt
foreign income from taxation" (Desai and Hines, 2003, p. 494). Third, they say that exemption is not necessary for CON, as a tax credit system will also work: is
already adjusted by the corporate tax rate. 5The exception is where the investment is greenfield, and the welfare criterion is national optimality: in this case, a
common rate equal to the domestic corporation tax rate is optimal. Especifically, they assume that "the total stock of physical capital in each country is unaffected by
international tax rules" (p494). 5 "if all countries tax foreign income (possibly at different rates), while permitting taxpayers to claim foreign tax credits, ..(this meets)..
the requirements for CON" (Desai and Hines, 2003, p. 494). Turning to Becker and Fuest (2010), in the case of unlimited management capacity, they find that the
exemption system is optimal from a national as well as a global perspective if foreign acquisitions of multinational firms do not a§ect domestic activities (Proposition
3 in their paper). Our results for unlimited management capacity generalize and clarify these claims: we show that with a cash-flow tax, any tax on foreign-source
income is optimal from a global perspective, not just a tax of zero (exemption) or a tax equal to the di§erence between domestic and foreign corporate tax rates
(credit). Desai and Hines have relatively little to say about nationally and globally optimal tax rules when national capital stocks respond to tax differences: in this
case, they say that "the welfare implications of CON are less decisive" (Desai and Hines, 2003, p. 494). Becker and Fuest (2010) consider the polar case where foreign
acquisitions reduce domestic investment one-for-one. They also consider a cross border cash áow system, as we do, and find that this system leads to national but
not to global optimality. We find that a cross-border cash áow system also generates global optimality; the difference between the two results is explained by that
fact that Becker and Fuest (2010) impose the condition that the tax rate of the cross border cash flow tax has to be the same as the domestic corporate income tax.
Our main contribution in this paper, relative to the literature, however, is to characterize optimal tax rules in the general case where management capacity is limited,
but not fixed. In this case, we show that the optimality of the exemption rule is not robust; national and global optimality of exemption only holds in the knife edge
case where the impact of foreign investment on domestic activity is exactly zero. As soon as there is a small but positive adjustment cost, deduction is nationally
optimal, and credit is globally optimal. Another related paper is Wilson (2011). In his model foreign acquisitions may increase or decrease the productivity of domestic
activities of multinational forms. While his model differs from ours in various respects, one important difference is that foreign taxes are always deductible from
taxable foreign source income. We do not make this assumption.7 Given this, he asks whether domestic taxes should be positive. His main result is that exemption is
usually not optimal. Another insight generated by our analysis is that many results for the optimal taxation 7Gordon (2011) also analyses optimal taxes on foreign
source income but focuses on income shifting between corporate profits and wages of employees. 6 of foreign profits in the presence of acquisitions investment that
have been derived in the literature are driven by assumptions on the tax base, rather than underlying factors like di§erences between acquisitions and greenfield
investment or the impact of foreign investment on domestic investment as such. In an extension of our baseline model, we show this by assuming that the tax base is
as in a typical income tax system, where tax depreciation is equivalent to economic depreciation and no relief is given for the cost of finance. In general in this setting,
it is not possible to achieve a first best, since the tax drives up the cost of capital leading to underinvestment. The optimal treatment of the mobile factor depends on
whether the costs of using that factor are fully deductible from tax. If so, then the usual rules apply to the tax rate: national optimality requires a deduction system,
and global optimality requires a credit system. If not, then these rules apply not to the tax rate, but to the rate of relief given, since this is what determines the
international allocation of this factor.

https://www.hbs.edu/faculty/Publication%20Files/09-040_146640ac-c502-4c2a-9e97-f8370c7c6903.pdf
The Effect of Labor on Profitability:
As argued by Hopp et al. (2007), increasing the amount of labor allows employees to spend more 4 time with customers. Fisher et al. (2006) show that more labor at
retail stores is associated with higher customer satisfaction and higher sales. Oliva and Sterman (2001) show that increasing the amount of labor, and thus reducing
the workload per employee, also reduces the likelihood that employees would make errors or cut corners in performing their tasks. Roth and Jackson (1995) also say
that becoming lean, in terms of decreasing labor levels, has the hidden cost of reduced SQ. In a non-service context, Lovejoy and Sethuraman (2000) state that
increasing employee workload can result in errors leading to quality problems. All these studies point to a positive relationship between labor levels and quality.
Quality has been used and defined in several ways (Garvin 1987). Critiquing this variety of approaches is beyond the scope of this paper. In my research setting, two
dimensions of quality are particularly important: SQ and CQ. Consistent with prior literature, SQ in my setting is defined externally by the customer; it measures
customers’ assessment of their service experience (Parasuraman et al. 1985). Also consistent with prior literature, CQ in my setting is an internal measure of quality3
and is defined as the degree to which stores conform to prescribed standards related to logistics activities (Garvin 1988).4 Below, I review the literature that examines
the effects of SQ and CQ on firm profitability. I exclude those studies that examine the effect of Total Quality Management (TQM) practices on firm performance
because TQM is not a specific measure of quality, but a broad management practice. The effect of service quality on profitability The relationship between SQ and
profitability is best described by three of the linkages in the service profit chain (Heskett et al. 1994). Profitability is stimulated by loyal customers; customer loyalty
results 3 Note, however, that that the term internal quality used in operations management literature is different from the term internal quality used in the service
management literature to refer to employees’ satisfaction with their work environment (Hallowell et al. 1996; Heskett et al. 1997). 4 Note that CQ and SQ are not
mutually exclusive. Conformance with prescribed processes is one driver of SQ (Parasuraman et al. 1985). 5 from customer satisfaction; customer satisfaction results
from the value of services provided to the customers. The value of services provided to the customers is a function of SQ. Empirical evidence for some of the linkages
in the service profit chain, however, has been limited (Kamakura et al. 2002). While the positive relationship between SQ, customer satisfaction, customer loyalty,
and increased sales is empirically well established (e.g., Ittner and Larcker 1998; Loveman 1998), the relationship between SQ, customer satisfaction, and profitability
is not. (See Zeithaml 2000 and Gupta and Zeithaml 2006 for reviews of studies that examine the effect of SQ and customer satisfaction on firm financial
performance.) Studies at the firm and industry levels offer mixed results about the effect of SQ on profitability. For example, in a study of 140 firms in the United
States, Ittner and Larcker (1998) find a positive relationship between customer satisfaction and market value of equity in a firm. In a study of 200 firms in the U.S.,
Anderson et al. (2004) also find a positive relationship between customer satisfaction and market value of a firm, measured as Tobin’s q. However, the industry-level
findings differ between these two studies. Anderson et al. (2004) find the strongest link between customer satisfaction and Tobin’s q at department stores; yet Ittner
and Larcker (1998) find a negative relationship between customer satisfaction and market value of equity in the retail industry. In a study of Swedish firms, Anderson
et al. (1997) find that the relationship between customer satisfaction and return on investment varies across industries. For example, in some industries, such as
department stores, gas stations, and supermarkets, firms that have low customer satisfaction also have the highest return on investment. The authors also find that
higher customer satisfaction is associated with higher labor productivity for firms producing goods but with lower labor productivity for service firms, indicating a
trade-off between customer satisfaction and productivity in service settings. Using data from 77 firms, Mittal et al. (2005) find limited evidence for the effect of
customer satisfaction on stock returns. But the authors find a positive effect of customer satisfaction on Tobin’s q, an effect that is more pronounced for more
efficient firms. Studies at the business-unit level offer limited evidence about the effect of SQ on profitability. Using data from patients discharged from 51 hospitals,
Nelson et al. (1992) find that SQ is associated with hospital revenue, earnings, and return on assets. Using data from 73 branches of a bank, Ittner and 6 Larcker
(1998) find that, while customer satisfaction is associated with increased sales, it has no effect on measures of profitability. Using data from stores of a grocery chain,
Sulek et al. (1995) find that customer satisfaction is associated with higher sales per labor hour—a measure of labor productivity—a result which contradicts that of
Anderson et al. (1997). The mixed evidence about the effect of SQ on profitability suggests that the effect depends on the operating context. Hence, as recommended
by Zeithaml (2000), the relationship between SQ and profitability needs to be studied in specific contexts so that theoretical relationships for categories of companies
can be generalized. The effect of conformance quality on profitability Many argue that investment in CQ is associated with long-term firm performance because it
allows firms to learn and improve more quickly (Crosby 1980; Fine 1986; Li and Rajagopalan 1998). Several empirical studies show a positive effect of CQ on
operational performance (e.g., Maani et al. 1994; White 1996; Krishnan et al. 2000) and customer satisfaction (Fynes and Voss 2001; Tsikritsis and Heineke 2004). Ton
and Huckman (2008) show that CQ moderates the effect of employee turnover on firm performance. But there is limited empirical evidence for the positive effect of
CQ on financial performance (Sousa and Voss 2002). Using longitudinal data from 10 major airlines, Tsikritsis (2007) finds no relationship between CQ, measured as
lost baggage, and return on sales but does find a negative relationship between late arrivals, another measure of internal quality, and return on sales. Using data from
200 manufacturing companies in the electronics sector in Ireland, Fynes and Voss (2001) find no relationship between CQ and overall business performance. But
Corbett et al. (2005) examine ISO 9000 certification, a welldefined and focused method of standardization and process conformance, and find that firms that decide
to seek their first ISO 9000 certification perform better than control firms with similar characteristics on several measures of financial performance, including return
on sales and Tobin’s q. Several studies also look at the effect of process performance on firm profitability. Using data from bank holding companies in the U.S., Frei et
al. (1999) show that banks with better process performance 7 also have higher return on assets. Using data from 249 firms in the automotive and computer
industries, Ittner and Larcker (1997) find evidence that greater use of process-focused improvement methods is positively related to return on assets, but not to
return on sales. There are also studies that link operational efficiency and SQ to profitability. Cyprus, Soteriou, and Zenios (1999) examine these relationships and find
that operational efficiency and SQ are correlated, but the authors do not report a significantly positive relationship between SQ and profitability. Kamakura et al.
(2002) also identify units that can offer SQ and profits more efficiently. The dearth of empirical evidence linking CQ and profitability provides an opportunity to
examine this relationship further.
The literature review suggests a positive relationship between labor levels and quality, but also suggests that the relationship between quality and profitability will
depend on the context. At retail stores, increasing the labor level is likely to increase both CQ and SQ. When store employees have more time, they are less likely to
make errors in activities such as shelving merchandise or placing price tags on display shelves and more likely to spend time with customers. In turn, sales are likely to
be higher when products are shelved properly (Ton and Raman 2008) and salespeople are available (Fisher et al. 2006). CQ is also expected to increase future sales at
retail chains that use centralized merchandise planning systems, since the performance of these system depends on conformance to in-store merchandising
specifications and on accurate point-of-sale and inventory data (Raman et al. 2001). In addition to increasing sales, CQ is likely to improve labor productivity and
reduce shrink. Employees can shelve, replenish, and help customers find products more quickly and fewer products are expected to be damaged or lost.

Related Local Literature

https://www.theatlantic.com/international/archive/2013/05/the-grim-reality-behind-the-philippines-economic-growth/275597/
The Grim Reality Behind the Philippines' Economic Growth
According to (Keenan 2013) the country is being heralded as the new Asian success story, but only an elite few reap the rewards.
Skyrise buildings are seen amidst a residential district near Manila's Makati financial district on May 3, 2013. (Erik De Castro/Reuters)
In a neighborhood of so-called "Asian tigers," the Philippines has quietly emerged as the region's newest economic darling. At 6.6 percent, the Filipino economy's current GDP
growth rate is the second highest in Asia, behind only China's. That growth is projected to continue over the next few years, in part because Filipinos are in a "sweet spot"
demographically: the Philippines has the youngest population in East Asia, which translates into lower costs to support a younger workforce and less economic drag from
retirees. Last month, Fitch Ratings (one of the world's three major credit rating firms) upgraded the Philippines to a "BBB-" with a stable outlook -- the first time the Philippines
has ever received investment-grade status and a huge vote of confidence in the Filipino economy. And last year, the World Economic Forum moved the Philippines up ten points
to the top half of its global competitiveness ranking for the first time in its history. These economic improvements are in part due to President Benigno Aquino, whose steps to
increase transparency and address corruption sparked renewed international confidence in the Filipino economy even during the global slowdown.
"The Philippines is no longer the sick man of East Asia, but the rising tiger," announced World Bank Country Director MotooKonishi during the Philippines Development Forum in
Davao City in February.But that economic growth only looks great on paper. The slums of Manila and Cebu are as bleak as they always were, and on the ground, average
Filipinos aren't feeling so optimistic. The economic boom appears to have only benefited a tiny minority of elite families; meanwhile, a huge segment of citizens remain
vulnerable to poverty, malnutrition, and other grim development indicators that belie the country's apparent growth. Despite the stated goal of President Aquino's Philippine
Development Plan to oversee a period of "inclusive growth," income inequality in the Philippines continues to stand out.

In 2012, Forbes Asia announced that the collective wealth of the 40 richest Filipino families grew $13 billion during the 2010-2011 year, to $47.4 billion--an increase of 37.9
percent. Filipino economist Cielito Habito calculated that the increased wealth of those families was equivalent in value to a staggering 76.5 percent of the country's overall
increase in GDP at the time. This income disparity was far and away the highest in Asia: Habito found that the income of Thailand's 40 richest families increased by only 25
percent of the national income growth during that period, while that ratio was even lower in Malaysia and Japan, at 3.7 percent and 2.8 percent, respectively. (And although
critics have pointed out that the remarkable wealth increase of the Philippines' so-called ".01 percent" is partially due to the performance of the Filipino stock market, the
growth of the Philippine Composite Index during that period would not account for such a dramatic disparity from neighboring countries.) Even relative to its regional neighbors,
the Philippines' income inequality and unbalanced concentrations of wealth are extreme.

Meanwhile, overall national poverty statistics remain bleak: 32 percent of children under age five suffer from moderate to severe stunting due to malnutrition, according to
UNICEF, and roughly 60 percent of Filipinos die without ever having seen a healthcare professional. In 2009, annual reports found that 26.5 percent of Filipinos lived on less than
$1 a day -- a poverty rate that was roughly the same level as Haiti's. And a new report from the National Statistical Coordination Board for the first half of 2012 found no
statistical improvement in national poverty levels since 2006. Even as construction cranes top Manila skyscrapers and the emerging beach town of El Nido unveils plans for its
newest five-star resort, tens of millions of Filipinos continue to live in poverty. And according to Louie Montemar, a political science professor at Manila's De La Salle University,
little is being done to destabilize the Philippines' oligarchical dominance of the elite.

"There's some sense to the argument that we've never had a real democracy because only a few have controlled economic power," he said in an interview with Agence France-
Presse. "The country dances to the tune of the tiny elite."Many observers blame the inequality on widespread corruption in local government, which makes it difficult or
impossible for many Filipinos to launch small businesses. (In 2012, Transparency International, a non-governmental organization that monitors and reports a comparative listing
of corruption worldwide, gave the Philippines a rank of 105 out of 176, tied with Mali and Algeria, among others.) Low levels of investment also suppress business growth: the
Philippines' investment-to-GDP ratio currently stands at 19.7 percent. By comparison, the investment rate is 33 percent in Indonesia, 27 percent in Thailand, and 24 percent in
Malaysia.For the select few Filipinos who live in beach towns and other popular tourism areas, however, the recent influx of foreign tourists to the previously overlooked
country has meant new business opportunities. Celso Serran, 38, a rickshaw driver in the growing tourist town of El Nido, said that the economic impact of tourism has had a
significant impact on his income. "Today, a driver can reasonably expect to make 500 Philippine Pesos ($12.16) per day," said Serran. "Before the tourists started coming, he
might make 200 PHP ($4.86) on a good day."For some, the tourism industry is so clearly the only option that it even pulls them away from their hometowns towards more
tourist-friendly cities. DorinaGenturo, 20, moved from Puerto Princesa, the capital of Palawan, to El Nido for the better job opportunities there. "There are definitely a lot more
jobs in tourism, in hotels and tour companies," she said. "But it's not like this in other towns."Meanwhile, other huge sectors of Filipino industry (such as banking,
telecommunications, and property development) are almost entirely monopolized by a few elite political families, most of whom have been in power since the Spanish colonial
era. And despite wide-reaching government reforms from the 1980s, those industries remain effective oligarchies or cartels that vastly outperform small businesses. According
to a paper released by the Philippine Institute for Development Studies, small and medium enterprises (SMEs) account for roughly 99 percent of Filipino firms. However, those
SMEs only account for 35 percent of national output--a sharp contrast with Japan and Korea, where the same ratio of SMEs accounts for roughly half of total output. This
translates into far fewer high-paying jobs on the local level for Filipino employees and exacerbates the huge income disparity across the country.

Related Foreign Literature

https://www.wsj.com/articles/u-s-companies-bring-more-foreign-profit-home-1427154070
U.S. Companies Bring More Foreign Profit Home
According to (Monga 2015) U.S.-based multinationals booked a ticket home last year for an estimated $300 billion in foreign profits—the most in nearly a decade—chipping
away at an enormous offshore cash pile that has drawn scrutiny from regulators and lawmakers.
Dozens of companies in the S&P 500 index, including eBay Inc., EBAY -1.38% VeriSign Inc. VRSN 1.13% and Stryker Corp. SYK 1.91%, set aside those profits to buy back stock, pay
for capital improvements, such as factories and equipment, and even to fund daily operations.
In dollar terms, earnings repatriated or earmarked for repatriation by American companies in 2014 rose 7% from the previous year, according to a report from Credit Suisse
Group AG. That was the most aggressive they have been since 2005, when they brought home $359 billion after Congress declared a “tax holiday,” allowing them to skirt the
statutory U.S. corporate-tax rate of 35%.The impetus for the latest uptick isn’t so clear. “It’s still a mystery,” said Anthony Carfang, a partner at Treasury Strategies Inc., a
Chicago-based consulting firm. “There may be ways to use the money in the U.S. that’s going to get companies a higher rate of return.”
Even so, U.S. companies are still sitting ona record $2.1 trillion in foreign earnings, including about $690 billion in cash.
Some companies remain reluctant to move their money. The strong U.S. dollar eats into profits made in foreign currencies. And there are louder cries in Washington for a tax
overhaul this year, encouraging some companies to wait and see what happens.

There’s little apparent reason “for companies to bring the money back right now,” said Mr. Carfang.American companies pay taxes on their foreign profits in the countries where
those profits are earned. But they don’t have to pay Uncle Sam as long as the money is “indefinitely reinvested” abroad.A company might, for example, use the funds to expand
its local sales force or to buy a rival.But if a company brings money back to the U.S., or lays plans to do so, it owes the Internal Revenue Service the difference between the
foreign taxes paid on the sum and the U.S. tax rate, which is almost always higher. And it must book the tax on its accounting statements. Most companies try to find ways to
offset the additional taxes with credits.Although Credit Suisse’s analysis was limited to the S&P 500, companies outside the index also tapped their foreign earnings last
year.Footwear manufacturer Crocs Inc. reclassified $165 million of its foreign earnings as eligible for repatriation in 2013. It recorded $11.7 million in taxes,but waited another
year to bring the money home. Crocs used a combination of tax breaks from charitable donations and credits tied to unused stock compensation to shrink its tax payment to the
IRS, said Chief Financial Officer Jeff Lasher. “We were trying to keep the cash taxed at zero,” said Mr. Lasher. Crocs used the money to buy back shares and finance its U.S.
operations.Buybacks have become a popular use for foreign earnings. Internet marketplace eBay set aside $9 billion last year to bring back to the U.S., a sum it said it could use
to fund buybacks or acquisitions in coming months. The company booked $3 billion in U.S. taxes on the transaction.Internet registry operator VeriSign repatriated $741 million
last year and used at least part of it to take $867.1 million of its shares off the market. The company offset the taxes with a credit it earned when it liquidated a subsidiary the
previous year.Others are using the cash to pay down debt. Teleflex Inc., a medical-devices company, repatriated $237.1 million last year to repay $235 million it had borrowed
from a bank credit line.Concern about the cost of a tax audit or penalty could be motivating some U.S. companies to bring money home. Credit Suisse’s analysts said that
companies might be finding it harder to make the case that their foreign earnings are indefinitely invested, especially the large sums simply sitting in cash accounts.

The Public Company Accounting Oversight Board, the government’s audit watchdog, warned recently that it would pay close attention to the way auditors treated such
earnings. The Treasury Department, meanwhile, has made it harder for a U.S. company to buy a foreign one with the goal of relocating its headquarters to a lower-tax country.
Last month, President Barack Obama proposed letting companies bring back the profits they hold at overseas subsidiaries at a tax rate of 14%, and then proposed taxing foreign
earnings going forward at a minimum of 19%.Amid the annual congressional wrangling over tax policy, companies have found some creative ways to reduce the tax impact of
repatriation.Stryker, which makes medical devices, said last year that it earmarked $2 billion for return to the U.S. The company incurred tax bills in Europe when it moved some
of its intellectual property to the Netherlands from other European countries and realized that those taxes would help reduce its U.S. tax bill on the money to roughly 5%.
“We will use the funds to drive growth in our existing businesses through investments in acquisitions, dividends and share repurchases, in that order,” said CFO Bill Jellison.

https://ageconsearch.umn.edu/bitstream/98749/2/READYFORDETERMINANTSOFPROFITABILITYPERFORMANCEON01-14-2011-1.pdf

http://bizresearchpapers.com/Paper-6new.pdf
Jeepney as an informal sector (Silock, 1981) with its flexibility and dynamism, and unhampered by the regulations that
govern the formal sector offers a new concept in development without having to face the hurdles that are inherent in
the organized sector. This creates space for a rapidly increasing class of entrepreneurs with limited resources who find
the unofficial system of functioning related to their own methods. The informal Jeepney industry is often described as a
low productivity backwater “sponge” absorbing those who cannot find productive employment in formal urban activities
but in reality it generates more jobs and income per vehicle. Chi
Related Local Studies
https://pdfs.semanticscholar.org/6a94/949c3afe29df5bd1fadb5de136eb952a79cd.pdf
Modigliani and Miller (1958) were the first ones to landmark the topic of capital structure. This theory put forward by Modigliani and Miller (MM) explains the impact
of taxation, bankruptcy costs, and agency costs on the determination of an optimal capital structure. Four theoretical approaches can be distinguished namely the
irrelevance theory such as Modigliani and Miller (1958) , the trade off theory (Bradley et al., 1984), agency cost theory (Jensen and Meckling, 1976) and pecking order
theory (Myers and Majluf, 1984). The three conflicting theories of capital structure such as trade-off theory, agency cost theory and pecking order theories have been
developed after the establishment of Modigliani and Miller’s theory. Whereas the trade-off, signaling, and agency theories expect a positive relationship between
profitability and leverage, the pecking order theory predicts a negative one. Most empirical studies observe a negative relationship between leverage and
profitability. The Pecking Order Theory of capital structure (Myers 1984) suggested an inverse relationship between leverage and profitability. The findings of Kester
(1986), Titman and Wessels (1988), Rajan and Zingales (1995) and Booth et al. (2001), empirically confirm an inverse relation between the leverage ratio and
profitability. Lalith (1999) examines the use and determinants of leverage in a cross section of quoted companies in Sri Lanka and stated that profitability is reliably
negatively correlated to leverage suggesting that more profitable firms tend to use less leverage. On the other hand, the trade-off, signaling, and agency theories
expect a positive relationship between profitability and leverage. The free cash flow theory (Jensen, 1986) suggested that debt reduces the agency cost of free cash
flow. This theory implies a positive association between leverage and profitability. In a study carried out by Sangeetha and Sivathaasan (2013), a significant strong and
positive relationship between profitability and leverage (r = 0.569, P<0.01) has been found. Frank and Goyal (2004) experienced a positive relationship between
profitability and leverage in some models. Moreover, various studies identified the determinants of profitability (Velnampy, 2005 & 2005, 2013).
Working capital management involves the relationship between a firm's short-term assets and its short-term liabilities. The basic goal of working capital management
is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses.
In relation to the relationship between working capital and profitability, there are mixed results from different scholars across the world. In the study conducted by
KessevanPadachi (2006) on the trend in working capital management and its impact on firm’s performance, it was found that high investment in inventories and
receivables is associated with lower profitability. A case study conducted by Abdul Kahman and Mohamed Nasir (2007) on working capital management and
profitability of Pakistan firms, a strong negative relationship between variables of working capital management and profitability of the firm has been observed. The
empirical results found by carpenter and Johnson (1983) revealed that there is a negative relationship between working capital policies and profitability. While Amir
shanh and Sana (2006) pointed out a negative relationship between working capital and profitability of the firm, Bradley and Michal Rubach (2002) on trade credit
and small business failures suggested that there is a relationship between poor working capital management and organizational failure. Anupchowdhury and Md.
Muntasir Amin (2007) conducted a research on working capital management practiced in pharmaceutical companies listed on share stock exchange. A positive
correlation had been found in the mathematical model, between current assets management and financial performance of pharmaceutical firms. Empirical evidence
has given varying results relating to the relationship between firm size and profitability. In this view, Velnampy and Nimalathasan (2010) examined about firm size on
profitability between Bank of Ceylon and Commercial Bank of Ceylon in Sri Lanka during ten year period from 1997 to 2006 and found that there is a positive
relationship between firm size and profitability in Commercial Bank of Ceylon Ltd, but there is no relationship between firm size and profitability in Bank of Ceylon.
Demsetz (1973) offers an alternative explanation for the relationship between firm size and profitability, arguing that the greater profits of large firms have little or
nothing to do with conventional scale economies. Using Internal Revenue Service data, he observes that large firms earn higher profits in highly concentrated markets
while smaller firms earn a normal return. On contrast, Managerial utility maximization thus provides a conceptual framework for a negative relationship between firm
size and profitability (Amato and Wilder 1985). Hall and Weiss (1967) who reported that size did tend to be associated with higher profit rates, however, reached the
opposite conclusion. While Marcus (1969) found either a weak negative relationship or none at all, Hall & Weiss (1967) observed through their studies a positive
association that disappears or reverses itself among the firms with the largest assets. Trau (1996), Sutton (1997), and Hart (2000) have reviewed the theoretical and
empirical literature on firm growth. In the early empirical literature, a number of manufacturing studies find either no relationship or a positive relationship between
firm sizes and growth rates. MacMillan and Day (1987) considered that rapid growth could lead to higher profitability based on evidence that new firms become more
profitable when they enter markets quickly and on a large scale. On the other hand, Hoy (1992) concluded that the pursuit of high growth may be minimally or even
negatively correlated with firm profitability. Keith (1988) examined the relationship between company characteristics, profitability and growth using accounts data for
a sample of 38 small manufacturing firms and his research revealed that size, age, location, and industry group are found to be limited value in explaining profitability.
The use of growth as a measure of firm performance is generally based on the belief that growth is a precursor to the attainment of sustainable competitive
advantages and profitability (Markman, 2002). In addition, larger firms have higher rates of survival (Aldrich 1986), and may have the benefits of associated
economies of scale. While growth has been considered the most important measure in small firms, it has also been argued that financial performance is
multidimensional in nature and that measures such as financial performance and growth are different aspects of performance that need to be considered (Wiklund,
1999) However, larger firms are found to grow faster than smaller, and younger firms are found to grow faster than older. In terms of non-debt tax shield, DeAngelo
and Masulis (1980) say that non-debt tax shield can be substitutes for the tax benefits of debt financing and a firm with larger non-debt tax shield is expected to use
less debt. The study conducted by Shah and Khan (2007) stated that size and tangibility has a positive and significant relationship with Leverage while profitability and
non-debt tax shield has significant and negative relationship with leverage.

https://www.um.edu.mt/library/oar/bitstream/handle/123456789/2885/10BACC034.pdf?sequence=1
“Customer profitability analysis is the reporting and analysis of revenues earned from customers and the costs incurred to earn those revenues” (Horngren et al.
2005, p.501). Although matters are improving, there is still very little information available about the profitability of customers since management is still primarily
focused on product profitability analysis for financial reporting purposes (Noone & Griffin 1997, p.76). Companies continuously make distinctions among their
customers by allocating more resources and providing more support to their regular and most profitable customers while reducing resources spent on customers who
are less profitable. Managers can ensure that customers providing large contributions to the operating income of a company receive a level of attention which
matches their contribution to the company‟s profitability (Horngren et al. 2005, pg.501). Wilson and Gilligan (2005, p.89) state that it is an approach to segmental
analysis where marketing managers require information showing both the existing picture and future prospects if marketing effort is to be directed at customers or
market segments with the greatest profit potential. According to Drury (2004, p.1008), a company can be very successful in terms of market share, customer
retention and acquisition, and customer satisfaction, but this may be achieved at the expense of customer profitability. Apart from having satisfied customers, a
company also wants profitable customers. Profitability should be analysed by different customer segments and unprofitable segments must be identified.

Customers are essential to any business, but some of them are not always profitable. “Customer profitability should always be based on a thorough understanding of
business processes so that it correctly represents the costs incurred to support different customers” (Selden & Colvin, 2003 cited in Horngren et al., 2005, p.505).
According to Howell and Soucy (1990, cited in Glautier & Underdown, 2001, p. 596) “few companies have management information that provides managers with a
clear understanding of which customers and markets are profitable”. Companies serve a wide range of customers with various demands and buying behaviour.
Therefore it is important that companies be knowledgeable as to how different customers consume the companies‟ resources. If the cost benefit of compiling the
information is favourable, and the outcome of any subsequent strategic decision leads to income increases, then CPA is justifiable (Smith & Dikolli 1995, p.3).
Customers may have little influence in markets which are dominated by large business organisations, and it is difficult to see how things could be adjusted, even if
more information would be made available (Glautier & Underdown, 2001, p.13). Customers are interested in information indicating the fairness of pricing policies,
such as the differential costs between one product or service and another.
Through close contact and interaction with customers, a company‟s sales and marketing organisation is usually in the best position to identify customers‟ need and
their perceived value for a product or service (Horngren et al. 2005, p.425).
CRM integrates people and technology to enhance relationships with customers, partners, and distributors. Management accountants track the costs incurred in each
value-chain category in order to manage costs in each category and improve efficiency. Cost information helps managers make cost-benefit tradeoffs (Horngren et al.
2005, p.5).
Piercy (1999, cited in Wilson & Gilligan, 2005, p.210) recognises the need for relationship strategies based upon the principles of market segmentation and
customers‟ relationship-seeking characteristics: “Relationship investment with profitable relationship seekers is good. Relationship investments with exploiters and
transactional customers are a waste. The trick is going to be developing different marketing strategies to match different customer relationship needs.” (Wilson &
Gilligan 2005, p. 210)