Professional Documents
Culture Documents
Philippines
Robelyn Z. Patigdas
Ralph M. Sibug
Charity A. Bate
ABSTRACT
The study ought to investigate The Impacts of TRAIN Law to the employees of
Lapu-Lapu City. The study used a sample size of 30 people. The researchers used survey
questionnaire for the wage earners to determine the effects of implementation of Republic
Act no. 10963 otherwise known as Tax Reform for Acceleration and Inclusion Law. The
study examined the respondents’ ratings on each question given concerning the factors
that are considered as parallel cause of the dilemma related to higher income tax rate,
towards individuals. Thus, the study concludes that there is a significant relationship
between the daily income and the impact of TRAIN law to the employees of Lapu-Lapu
City.
3
ACKNOWLEDGMENT
The researchers are exceedingly delighted and grateful to God Almighty for
At the same time our deepest gratitude and appreciation go to our School
Principal II of Pajo National High School, MR. RICARDO T. CAYACAP JR., for his
giving us the time and permission in conducting the study outside the said institution.
We would also like to express our deepest dedication and thank you to our
Practical Research II Instructor MS. ROWENA LEE P. RADAZA for her continuous
support, patience, motivation and most especially for making experience what
quantitative research and how hard it is without hard work and perseverance and its
time and guidance regarding with the statistical method to come up with a good results.
The Master teacher III in English, MRS. HELEN GRACE V. CRUZ, for
mentoring and being the consultant with regard to the grammar of transmittal letter.
The ever supportive family members, friends, mentors and teachers for the
undying support and for being the motivation in making this entire research. We also
thank the respondents that wholeheartedly participated in the survey given. Without the
presence of the said people above this study could not have been a reality.
4
DEDICATION
We wholeheartedly dedicate this to our loving and very supportive family for
giving us the full support and who always love us unconditionally which is our basis and
motivation for pursuing this study, giving us the words of wisdom to work hard on the
things that were assigned to us. For those people who never left our side, the hardships
and our little grief while conducting the study, whose the person that our crying shoulder
especially when conducting the pilot and not passing the reliability they give us strength
and courage to continue the study. We are truly thankful for having them in our lives that
we met this kind of people in hard times and good times they are always there to cheer us
up for us to cope up with the problems we are facing with. And lastly, we offer this study
to our glorious almighty father, we thank him for the guidance, strength, power of mind
that we came up with this kind of study, protection when conducting the survey outside
the school and not letting us into an accident and also giving us a healthy life. All of
TABLE OF CONTENTS
TITLE PAGE I
ABSTRACT II
ACKNOWLEDGMENT III
DEDICATION IV
TABLE OF CONTENTS V
CHAPTER I
INTRODUCTON
Rationale 1
THE PROBLEM
RESEARCH METHODOLOGY
Research Design 8
Research Environment 9
Research Respondents 9
6
Research Instruments 10
Definition of Terms 12
Theoretical Background 13
Theoretical Framework 15
CHAPTER II
CHAPTER III
Summary of Findings 22
Conclusion 23
Recommendation 23
APPENDIX
A. Transmittal Letter 25
B. Letter of Agreement 26
C. Survey Questionnaire 27
BIBLIOGRAPHY 32
CURRICULUM VITAE 33
7
LIST OF FIGURES
Hypothesis Testing 20
CHAPTER I
INTRODUCTION
The Tax Reform for Acceleration and Inclusion TRAIN law is the first package of
administration which seeks to correct a number of deficiencies in the tax system to make
it simpler, fairer and more efficient. It also includes mitigating measure that are designed
Congruent to that, this study aims to know the Impacts of the implementation of
R.A 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law to the
common Filipino citizen especially to those job holders whose position are directly
lowering and simplifying personal income taxes, simplifying estate and donor taxes,
expanding the value added tax (VAT). The Tax Reform for Accelerations and Inclusion
law exempts from paying taxes the first Php250, 000 annual taxable income, meaning
those earning Php21, 000 monthly will have to shoulder the burden of paying additional
tax.
The researchers observed a commotion and rants in the community about this
newly implemented taxation system. These actions led the researchers to conduct a study
The Tax Reform for Acceleration and Inclusion (TRAIN) law or R.A 10963 was
signed by President Rodrigo Duterte last December 9, 2017. TRAIN Law officially took
effect on the first day of January 2018 with the objective of simplifying the tax system
and make it fairer. The TRAIN Law will provide hefty income tax cut for majority of
Filipino taxpayers while raising additional funds to help support the government’s
accelerated spending on its ‘BUILD, BUILD, BUILD” and social services programs.
This Tax Reform package corrects a long-standing inequality of the tax system by
deducting the personal income taxes for 99 percent of taxpayers, hence giving them the
much needed relief after 20 years of non-adjustment of the tax rates and brackets.
This study is anchored on Fiscal Psychology Theory where it shows the role of
the cooperation between the taxpayer and the government (Lewis 1982) accordingly, the
and social services to eradicate extreme poverty and reduce inequality towards prosperity
at all. TRAIN Law addresses several weaknesses of the current tax system by lowering
and simplifying personal income taxes, simplifying estate and donor taxes, expanding the
Value Added Tax (VAT) base, all the automobile excuse taxes, and introducing excise
tax on sugar and sweetened beverages. According to Republic Act no. 10963 and
Department of Finance, in the next five years for the Education benefits, TRAIN law
10
could create a more conducive learning environment with the ideal teacher-to-student
ratio which can fund 629,120 public school classroom or can produce 2,685,101 public
school teachers; For Healthcare services, 60, 483 rural health units or 484,326 barangay
health stations and 1,324 provincial hospitals; For Infrastructure programs, additional
funds from the tax reform will be used for the projects of the Department of Public works
and Highways which consist of major highways expressways, and flood control projects,
The proposed Tax Reform Program aims to provide the needed, promoting better
lives for Filipinos and to benefit the entire nation, firstly, it aims to correct deficiencies of
the tax system, making it simpler, more efficient, and fairer. Contrary to what Naysayers
say the TRAIN law will benefit poor more by promoting equity
11
In the first quarter of the year, “This landmark measure is among the corner
stone of President Rodrigo Roa Duterte’s poverty alleviation initiative. Having said this,
it is the duty of government to sufficiently inform the people on how this new law would
affect their everyday lives. Apart from simplifying the country’s tax system, TRAIN
modernization and human capital formation, while easing the burden of the average
economic and social development of any country depends on the amount of revenue
generated for the provision of infrastructure in that given country”. They further stated
that a well-structured tax system would boost the generation of the income for a
Gerald W. Scully (2003) says that the tax reform is to achieve a trade-off
government spending and taxation into the analytical framework of economic growth. “In
line with the firm commitment to provide timely, reliable and accurate information to
citizen on the benefits of the government’s agenda, we have come up with a TRAIN
primer to help explain the law’s key provisions to the public”, this was the statement of
Harry J. Roque Jr. (Presidential spokesperson) in an interview with the media last
January 8, 2018. This is just part of the first steps of through economic growth of the
country, thus the TRAIN also aims to address prolong and overdue corrections in the tax
laws and introduces a more progressive tax system where the rich and the poor will
contribute to give better public services to the people. Ability to pay principle is the most
12
popular and commonly accepted principle of equity or justice in taxation, that is, citizens
of a country should pay taxes to the government in accordance with their ability to pay
Moreover De Guzman (June 2018) mentioned that the supreme court explains the
symbiotic relationship between the state and its citizens in the 1988 case of CIR vs.
Algue Inc. where it held that without taxes, the government would be paralyze for lock of
motive power to activate and operate it. Hence, despite the natural reluctance to surrender
part of one’s hard earned income to the taxing authorities, every person who is able to,
must contribute his share in the running of the government. Thus, the states inherent right
to tax its citizen to defray the expenses of government is aptly justified by the “Life
Blood Theory” of taxation.The life blood theory constitutes the theory of taxation, which
provides that the existence of government is a necessity; that government cannot continue
without means to pay its expenses; and that for these means it has a right to compel its
In addition Ellingsen (May 2014) analyze that, raising revenue from taxes
distorts economic behavior by changing the relative prices of various forms of market
activities. In general, this has an impact on how resources are located by the market. On
the otherhand, generating enough revenue is necessary for a government to finance many
revenue in the least distortionary manner is the main tension in designing tax system.
development of any country depends on the amout of revenue generated for the provision
of infrastructure in that given country”. They further stated that a well-structured tax
13
system would boost the generation of the income for a meaningful development of such
country. In general, the change upon the tax system has a significant impact of every the
people. TRAIN law enforce a not so good actions toward the people living below of the
average economic status, yet as a whole nation every people regardless of economic
equal circumstances in an equal way (James 2000) it says. A good tax system must be
designed on the basis of an appropriate set of principles, such as equality or fairness and
certainty. TRAIN aims to make the current tax system simpler, fairer, and more efficient
which Fairness Principle suggests that those with more income should contribute a larger
As for Dr. Tullao, he believes that the newly imposed bill is not anti-poor. For
him, TRAIN law precludes everyone to have equal benefits regardless of what state of
living they currently belong to. Employees with fixed rate of income will still “receive
the same income but the tax rate of the commodities they consume [will increase].”
Bottom line, the TRAIN law benefits the employed ton and does otherwise for the
THE PROBLEM
The main purpose of this study is to identify the impact of TRAIN law to the
2.2 Average
This study limits the response of wage earners. This study focuses on the
perception of the employees in Lapu-Lapu City towards TRAIN Law. This study is only
This section provides brief description on the various significance of the study.
The primordial purpose of the study is to provide the individuals with complete and
balanced information relating to the perception on TRAIN Law. Thus, the result of this
study will benefit the individual, community, students and the future researchers. This
study will serve as the basis for future plans of actions by the government agencies
especially the Local Government Units (LGU) with regard to the necessary action of
coping up with the rising issue of excise tax. It will also help the individuals to plan out
The Community, this research will help the to analyze and critique the issue the
parents on how to budget the money given to them. This will help the students to realize
how difficult life is and also making their own strategic way to save money.
Furthermore, this study will serve as a model for Future researchers of the
same nature if ever the existing problem has penetrated in this case will exist in the
future. Future researchers will benefit from this study and it will provide them the facts
needed to compare their study during their respective time and use ability.
16
RESEARCH METHODOLOGY
Research Design
This study used a Quantitative Descriptive Survey Design which analyzes the
characteristics such as daily income, marital status, and mandatory deduction among
between two or more variables and to determine the degree of the relationship.
Descriptive research design is the gathering, analyzing, classifying and ordering data
about impact of TRAIN law to the employees of big factor Lapu-Lapu City and then the
Research Environment
This study was conducted in Barangay Pajo and Pusok Lapu-Lapu City. These
two barangays, are the barangays in Lapu-Lapu City with the highest and grossing
economic growths.
barangays in Lapu-Lapu City, which ranked as top 6. Approximately 21, 000. This
number gives a big factor in economic development and quantity of workforce in the
area.
In the other hand, Pusok is one of the largest when it comes to job industry. In
fact, located in this barangay are Mactan Economic Philippine Zone Authority, known
Research Respondents
The respondents of the study are from Barangay Pajo and Pusok. The 30 main
respondents are identified through simple random sampling. This sampling procedure is
17
the most frequently used type of probability sampling technique. The 30 main
respondents were divided into 3 categories based on their daily income: below average,
Research Instrument
enable the researcher to obtain data about practices, situations or views at one point in
time through questionnaires or interviews. The use of survey permits a researcher to gain
information of the wage earners on on their perspective towards TRAIN Law. The
which includes the marital status, daily income, and mandatory deduction; wage group;
their perception on TRAIN Law. The research instrument used in this study is a
researcher-made questionnaire that has been validated through a pilot study conducted in
Data-gathering Procedure
In doing this research, the researchers started by discussing the current issue in
the community. The researchers have made the transmittal letter to be submitted to the
school principal for approval. The researchers constructed and used a researcher-made
questionnaire that has undergone reliability test. After the survey the data was tallied,
The statistical treatments used by the researchers in the presentation and analysis
1. t-test is used in this study to test whether there is a significant relationship of the
impact of train law to the employees with wages below minimum; minimum
t = r √ n-2
√1-r^2
Where:
r = correlation
n= sample size
2. The frequency distribution table (FDT) is also computed and presented in this
3. By the tallied data from the questionnaires, the relationship of the variables:
Employees response level to their perception on TRAIN law and their daily
income.
19
Definition of terms
employment, whether oral or written, express or implied, and has recognized rights and
Daily Income - money received, especially on a regular basis, for work or through investments.
Taxation - refers to the practice of a government collecting money from its citizens to pay
for public services. Without taxation, there would be no public libraries or parks.
created to administer, collect, integrate, improve, change and manage methodically tax
Frequency - The number of times that a periodic function repeats in the same sequence
Marital Status – are the distinct options that describe a person’s relationship with a
significant other. Married, Single, Divorced and widowed are examples of marital status
20
Theoretical Background
motivation of the taxpayer to pay taxes because there is no real advantage of the benefits
of tax payments (Hasseldine Dan Bebbington, 1991). Kogler et al., (2013) Dan Turner
(2005) A indicates that the level of voluntary compliance is more influenced by the
taxpayer to the government's trust, especially against the tax system. Fiscal Psychology
Theory was firstly introduced by Schmölders (1959), which emphasizes the lack of
motivation for the taxpayer to pay taxes because there is no real advantage of the benefits
of tax payments. Fiscal Psychology Theory provide better insight into how people behave
in the economic situation, to explore the effects of economic issues and government
action against the attitude of the community in an effort to encourage positive behavior to
comply with tax rules. Fiscal Psychology Theory is a mixture of economic and
psychological approach, which is another option that is better in explaining the tax
collaboration between taxpayers and the government. In other words, in the Fiscal
Psychology Theory, tax enforcement is seen as a crisis of behaviour, which can be fixed
Benefit Theory According to this theory, the state should levy taxes on
individuals according to the benefit conferred on them. The more benefits a person
derives from the activities of the state, the more he should pay to the government. This
principle has been subjected to severe criticism on the following grounds: If the state
21
maintains a certain connection between the benefits conferred and the benefits derived. It
will be against the basic principle of the tax. A tax, as we know, is compulsory
contribution made to the public authorities to meet the expenses of the government and
the provisions of general benefit. There is no direct quid pro quo in the case of a tax.
comparisons of utility—is now generally discarded, we shall not spend much time
discussing the sacrifice doctrine in detail. However, several aspects of this theory are of
interest. The sacrifice theory divides into two main branches: (1) the equal-
sacrifice principle and (2) the minimum-sacrifice principle. The former states that every
man should sacrifice equally in paying taxes; the latter, that society as a whole should
sacrifice the least amount. Both versions abandon completely the idea of government as a
supplier of benefits and treat government and taxation as simply a burden, a sacrifice that
Theoretical Framework
FISCAL PSYCHOLOGY
THEORY
Schmölders (1959)
_ __ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _
HOUSE BILL NO.4774
EMPLOYEES’ PERCEPTION
DAILY INCOME
PROCESS OUTPUT
INPUT
Quantitative Conducting
Descriptive symposium and
Survey Design seminars to
Respondent’s
Profile further deepen
the understanding
of the affected
Distribution of individuals of
Survey TRAIN law
Questionnaire
Teaching the
Wage group
Retrieval of affected
Questionnaire individuals on
practical
budgeting
Statistical Data
Perception of Treatment
the
respondents
towards TRAIN
Law
Analysis and
Interpretation
24
CHAPTER II
This chapter presents, analyzes, and interprets the data gathered from the
respondents for the purpose of formulating the findings, conclusion and recommendation
of the study
AVERAGE AVERAGE
MARITAL
STATUS
Single 4 7 2 13
Married 5 3 8 16
Other 1 1
DAILY
INCOME
150-319 6 0 0 6
320-489 4 10 0 14
490-659 0 0 2 2
660-829 0 0 4 4
830-1,000 0 0 4 4
MANDATORY
25
DEDUCTION
YES 4 7 10 21
SSS 4 7 1 12
PAG-IBIG 4 6 10 20
PHILHEALTH 4 6 10 20
GSIS 1 1 5 7
NO 6 3 0 9
The respondent’s demographic status states that the earners group has an equal
distribution, 10 for below average, average and above-average earners. Daily income
with 320-420 class has the most number of respondents with 14, followed by class 150-
mandatory deductions are 6. Deductions for PAG-IBIG and PhiHealth with both 20 are
The table above shows that most of the respondents are married, and most of them
are classified as above average earners. In terms of income, the class with the highest
frequency is class 320-489, rating 46 %. Great number also implicates that the majority
of the respondents have mandatory deductions, having the PAG-IBIG and PhilHealth as
the top.
26
CATEGORY SCORES
AVERAGE 279
TOTAL 837
PERCEPTION
350
300
250
SCORES
200
150
100
50
0
BELOW AVERAGE AVERAGE ABOVE AVERAGE
CATEGORY
The perception of the employees on the TRAIN Law for below average earners is
226, followed by average earners and above-average earners of 279 and 332,
respectively. (see Table 2 “Perception on the newly legalized TRAIN Law” and figure 2)
This implicates that below average earners have poor perception than average and
above-average earners. Thus, this means that TRAIN Law is more favourable to above-
average earners since it seems that respondents on this earners group agree to the
The respondents that belonged to above average has the highest score, that is 332,
which denotes that the above average earners have a most positive perception than the
27
other group. On the other hand, below average group shows the least positive outlook on
TRAIN Law. In conclusion, the employees with higher earnings have a positive
There is a
significant
their perception on
TRAIN Law.
The table above shows the hypothesis testing in which t-test is used to treat the
data. Having it formulated, T-computed value is ± 2.52, which has been derived through
Having ±1.699 as the critical value, the t-computed value falls on the rejection region of
the Bell shape (normal distribution). This indicates to reject the null hypothesis and
the daily income of the employees and their perception on TRAIN Law.
28
CLASSES FREQUENCY
18-22 3
23-27 10
28-32 12
33-37 4
38-42 1
Total 30
The table above indicates the frequency distribution table of the score-classes
from the respondent’s perception on TRAIN Law. The class interval is 5 which is
computed by the given formula 2k ≥ 30. The classes are 18-22, 23-27, 28-32, 33-37, 38-
42. The frequency of every class is as follows in exact order: 3, 10, 12, 4, 1. (see Figure 1
Most of the respondent’s score were in the class 28-32 in which out of the 30
respondents, 12 of them got the frequent score. The highest score belonged to the class of
Respondents with reflected least scores believed that the impact of TRAIN Law is
not beneficial to all members of the family. However the reflected high scores
CHAPTER III
This chapter deals with the summary of findings and the conclusions formulated
on the bases of findings. This study has provided certain recommendations of the
informative basis of research findings and suggestions for similar future researchers.
Summary of Findings
common law couple among the respondents. The lowest income of the respondents is
150, while the highest is 1000. Majority of the daily income of the respondents range is
320-489 which rates 46%. As regard to mandatory deduction, 21 of the respondents have
a mandatory deduction. Among the 21, there 3 with SSS,7 with GSIS, and 20 with PAG-
deduction.
Perception of the employees on the newly legalized TRAIN Law. The above
average earners got the highest score which totalled 332, indicating that they have a
positive perception about TRAIN Law. However, the below average group got the lowest
score of 226 which, in the other hand, denotes the least positive perception on TRAIN
Law. Therefore, the employees with higher earnings have a more positive perception
Relationship between the daily income and the perception on TRAIN Law.
Having the ±1.699 as critical value, the t-computed value, which is ±2.52, falls on the
rejection region of the normal distribution. Through hypothesis testing, the decision is to
Conclusion
In this study, most of the respondents are married and mostly have an income
between 320-489. Moreover, the majority has a mandatory deduction most especially in
PAG-IBIG and PhilHealth. In terms of perception through their daily income, the
employees with higher earnings have a positive perception about the newly enforced law.
Upon formulating the hypothesis testing, it resulted in rejecting the null hypothesis.
income of the respondents and their perception on the newly legalized TRAIN Law.
Recommendation
Upon implementing the TRAIN law, employees live in a way that expenses
maximizes their whole earnings, leaving them with no resources to be kept or saved, thus
this disadvantages could compensate this dis-benefit, through fairer and balanced tax
system, suspending the income taxes of earners with monthly income of Php. 21,000 and
Based on the findings and conclusions the researchers would like to recommend the
following;
1. Below average earners tend to show an unfavorable outlook toward TRAIN Law.
Thus, the researchers would like to recommend for them to create a budget plan in
2. Upon conducting the survey, the researchers observed that most of the
respondents have heard and has been informed about the TRAIN Law. However,
most of the respondents lack awareness and knowledge of the said implemented
3. The future researchers shall include in their studies the external factors that affects
the employees due to the implementation of the TRAIN law which are not
APPENDIX A
Dear Sir:
Sincerely Yours,
Anthony Jay Ybañez
Erica Mae Angel K. Reyes
Roxanne Kent Jelly D. Repormado
Ralph M. Sibug
RobelynPatigdas
Charity Bate
Researchers
Noted By:
Approved By:
APPENDIX B
Dear Respondents:
Greetings!
We are presently conducting a study entitled "The Impact of TRAIN Law", as a partial fulfillment of our
requirement in Practical Research II.
In this connection, we would like to request your kind cooperation to be one of our respondents in our
study. We hope you can help us by answering the survey sincerely and truthfully.
Ralph M. Sibug
RobelynPatigdas
Charity Bate
Researchers
Noted by:
Approved by:
APPENDIX C
Survey Questionnaire
The questions on this survey ask details and information about yourself also about your monthly
income, mandatory deductions, house budget and savings during this time and the past year/s.
The following questions in the table below will be rated on a Likert scale in which you will
Name (optional):
Put check mark (/) on the box that corresponds to your answer.
(If YES, please confirm the following) ___SSS ___PAG-IBIG ___ PHILHEALTH ___ GSIS
Rate the following questions with 5 (Strongly agree), 4 ( Agree), 3 (Neutral), 2 (Disagree), 1 (Strongly
Disagree).
RATINGS
QUESTIONS 5 4 3 2 1
law implementation
implementation.
APPENDIX D
FREQUENCY DISTRIBUTION
14
12
10
FREQUENCY
8
6
4
2
0
18-22 23-27 28-32 33-37 38-42
CLASSES
37
APPENDIX E
1 26 386
2 32 376
3 33 376
4 26 386
5 28 266
6 25 160
7 32 386
8 29 280
9 31 266
10 37 376
11 23 386
12 18 150
13 24 386
14 18 150
15 25 600
16 32 376
17 26 386
18 29 1000
19 29 1000
20 24 386
38
21 29 800
22 29 800
23 24 386
24 28 700
25 33 800
26 30 386
27 19 600
28 26 386
29 34 1000
30 38 1000
39
BIBLIOGRAPHY
Online Sources
De Guzman (June 2018). TRAIN law; Boom or Bane. Retrieved September 22, from
www.pressreader.com/the-philippine-star
Ellingsen (2014).A theoretical and empirical analysis of the impact of dual income
www.duo.uio.no/masteroppgave.pdf
Manasan (August 2017) Assessment of the 2017 Tax Reform for Acceleration and
Romer (2008). The macroeconomics effect of tax changes: estimates based on a new
CURRICULUM VITAE
Contact Information
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Citizenship: Filipino
Education
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Gender: Female
Citizenship: Filipino
Education
References