HIGHER SCHOOL NG UMAK - UNIVERSITY OF MAKATI PAGE 1

TRAIN LAW AS PERCEIVED BY SOCIAL STUDIES PROFESSORS OF

UNIVERSITY OF MAKATI

In Partial Fulfillment of the Requirements

For Practical Research 1

Asuncion, Krystel Angelyn G.

Cabison, Jheann I.
Espiritu, Junalyn L.
Gomez, Michaella May E.
Mapula, Josephine G.
Pineda, Christine Joy F.
Prado, Nickey Faith D.
Vargas, Ma. Kristina Charlene B.
Vicera, Jasmin Joy L.

G12-45 ABM

University of Makati
J.P Rizal Extension, Brgy. West Rembo, Makati City

March 11, 2018

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ACKNOWLEDGEMENT

We would like to acknowledge Professor Evelyn Ayson for guiding and

helping us in this research paper. As well as our parents who supports and give

us motivation in everything. And of course, our Lord God who gives us hopes

and strength in finishing this research paper.

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DEDICATION

We would like to dedicate this research paper to our Lord God who

guides us throughout the making. To our parents, professors and friends who all

help to make this possible. And to the future researchers who will use this as

their reference in their future studies.

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TABLE OF CONTENTS

Title Page i

Acknowledgement ii

Dedication iii

Table of Contents iv

CHAPTER 1: THE PROBLEM AND ITS SETTING

Introduction

Background of the study

Conceptual framework

Statement of the problem

Scope and delimitation

Significance of the study

Definition of terms

CHAPTER 2: REVIEW OF RELATED LITERATURE AND STUDIES

Related literature

Related study

Synthesis
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CHAPTER 3: METHODOLOGY

Research design

Research locale

Population and sampling design

Research instrument

Data gathering procedure

Data analysis
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CHAPTER 1

THE PROBLEM AND ITS SETTING

Introduction

Our tax system is overly complicated and burdensome, especially for

small taxpayers. The Philippine tax system currently has some of the highest

income tax rates in the region. Compared to our major ASEAN counterpart, our

corporate income tax is the highest at 30%, a rate that "turns off" foreign

investors who prefer to business in our low tax neighbors.

In order to solve this issue, the government conducts a new tax system so

that every individual taxpayer will have knowledge about the new tax system.

Apparently, the Phil. Tax system is a very complicated one. This was certainly

considered by congress when it proposed the TRAIN law.

Consequently, TRAIN introduces enhancements, which are geared

towards simpler tax compliance. The rules of tax system should be as plain and

simple as possible. Not only it will be easier for taxpayers to understand those

liabilities and to comply, but it will also maximize the administrative cost of

collective.

Finally, a great tax system serves more taxes to people who can afford to

pay more. One way to do it is to make the rich pay for a larger fraction of their

income than the poor, that is, by making the tax system "progressive".
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In this research, the researchers aim to know the benefits of the

modification of the new tax system. The researchers also plan to study every bit

of the regulation of the Tax Reform for Acceleration and Inclusion (TRAIN) to

document possible changes and effects of its modification as a student and as a

future employee.

Background of the study

A 2015 study found that the Phil. Ranked 127th out of 189 economies in

terms of ease of paying taxes. Another study revealed that the "complexity of tax

regulations" and our "high tax rates" are some of the most problematic factors

for doing business in the country. The researchers search that the rules of the

tax system should be as simple and plain as possible. Not only it will be easier

for taxpayers to understand their liabilities and to comply, but it will also

minimize the administrative costs of collection.

The new tax system is the Tax Reform for Acceleration and Inclusion

(TRAIN). The result of this study is to create a more just, simple and more

effective system of tax collection, as per the constitution, where the rich will have

a bigger contribution and the poor will benefit more from the government’s

programs and services. This study is more efficient for all, while also raising the

resources needed to invest in our infrastructure and our people.

To the researchers, this study helps the researchers to know the

modification of the new tax system and the purpose of the study. The researcher

will be able to know what are the changes, benefits and the reaction of the
 HIGHER SCHOOL NG UMAK - UNIVERSITY OF MAKATI PAGE 8

students in the new tax system. This study will give you knowledge about the

Tax Reform for Acceleration and Inclusion (TRAIN).

Through TRAIN, every Filipino contributes in funding more infrastructure

and social services to eradicate extreme poverty and reduce inequality towards

prosperity for all. TRAIN addresses several weakness of the current Philippine

tax system by lowering and simplifying personal income taxes, simplifying estate

and donor’s taxes, expanding the value-added tax (VAT) base, adjusting oil and

automobile excise taxes, introducing excise tax on sugar-sweetened beverages.

Statement of the Problem

GENERAL PROBLEM: This study attempts to document the perspective of the

students regarding the changes covered of the new tax system

1. What is the new tax system?

2. What are the changes covered by the new tax system?

3. What is the purpose of implementing the new tax system?

4. How will the changes covered by the new tax system help our economy’s growth?

5. As a student, what is their perception regarding the modification of the new tax

system?
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Hypothesis

a. Null - The new tax system is not significant to the indigenous people because

of so much excise tax to the products that covered of this system.

b. Alternative - The new tax system is significant to others, according to

research, it will help some of the workers or have a business for them to

increase prices of their goods or products.

Significance of the study

This study is conducted to further understand the changes that the

government had implemented in order for tax payers, students, the community,

and the future researchers to modify the new tax system.

The following are believed to be the benefactor of the implemented law:

To the tax payers- the tax payers are assumed to be the main benefactor of the

implemented law for the purpose of better enhancing the process of paying for

different types of taxes. The government also encourages the people to compile

with their balanced taxes accordingly.

To the sellers or suppliers- there have been a few changes with the price of

the goods being sold to the main consumers and so with the advantage of the

new tax system the sellers may add a few increase in the price of the goods

they sell.
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To the students- the new tax system also affected the budget of the

government in accordance to education. The new tax system is favorable to the

students for there are a lot of benefits being provided to schools.

To the senior citizens- the TRAIN law is favorable for the senior citizens since

it is convenient to them in paying and redeeming their retirement fee.

To the workers- it is very convenient for them because in the TRAIN law, all of

which is being paid by the workers are all collected accordingly.

To the future researchers- they can use this study in the future as a related

literature.

Scope and Delimitation

The researchers included three factors from the TRAIN law matrix which

are the following; excise tax on fuel and petroleum, higher excise taxes on

sugar-sweetened beverages and VAT exemption.

The excise tax on fuel and petroleum have been all over the news. The

Department of Trade and Industry and Department of Energy have been strictly

monitoring the increase in prices to sanction retailers who may be profiteering or

imposing an unnecessary markup on old stocks and other unaffected goods.

The higher excise taxes on sugar-sweetened beverages affects.

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Research Paradigm

TRAIN LAW

National Government

Tax Payer Workers

Supplier/Seller Students Senior Citizens

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Chapter 2

Review of Related Literature and Study

Related literature

As reiterated by the Department of Finance, TRAIN is the first step to

once and for all correct our unfair, complex, and inefficient tax system. After 20

years, we are finally adjusting and updating the personal income tax rates which

burdened mostly our ordinary employees earning above minimum wage up to

P5000,000

This law reform package corrects a longstanding inequity of the tax

system by reducing personal income taxes for 99% of taxpayers, thereby giving

them the much needed relief and new year gift the government is giving to the

people.

The conducted study of The TRAIN will provide hefty income tax cuts 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. With TRAIN, the income tax payment of 99 percent of wage

earners will be lower. In contrast, those earning more than P8 million annually

will pay higher taxes at 35 percent, whereas the highest tax bracket before was

32 percent. I think it’s fair enough to say that those earning almost P700,000 per

month should pay higher taxes.

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Another argument is that lowering taxes will incentivize people to work

harder. A high tax rate is like punishing people for working – imagine a 90

percent tax rate, perhaps everyone will stop working. The appropriate way of

assessing the TRAIN is to look at its “net incidence”: by looking at the additional

burden on the tax side versus the additional benefit on the expenditure side.

The tax revenues to be collected will not be stashed by the government as

if it was stolen from the people. Rather, it will be spent on the pressing needs of

the country, which will benefit the poor the most. And in line with that, tax policy

is essentially a balancing act between efficiency and equity. People want to

impose progressive taxes to make society a fairer place to live in. But at the

same time, Filipinos want to make sure that such taxes do not reduce economic

activity so much. Unfortunately, the Philippines tax system is currently deficient

in both respects. Not only do our taxes disproportionately burden the poor and

benefit the rich, but they also yield too little revenue given the distortions they

create. Needless to say, both problems need to be resolved soon.

Comprehensive tax reform in the country is long overdue (Punongbayan, 2017)

Under the TRAIN law, there are administrative reforms included which will

simplify compliance for taxpayers: From a 12-page income tax return, it has

been reduced to only 4 pages. The deadline of the filing of the first quarter ITRs

was moved from April 15 to May 15 effective 2018. However, deadline for filing

annual income tax return shall still be on or before April 15. The second
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installment of annual income tax was moved from July 15 to October 15.

Taxpayers with gross annual sales/receipts amounting to

million and below are exempt from having their books of accounts (and financial

statements) audited by independent CPAs. Use of relevant and appropriate set

of bookkeeping records duly authorized by the Secretary of Finance, and

issuance of receipts at the point of sale valued at P100 or more.

The benefits of tax reform are productivity grows, economy expands, wages

increase, workers are better educated, increase in tax revenue, companies hire

more.

The Tax Reform for Acceleration and Inclusion (TRAIN) is the first package

of the comprehensive tax reform program (CTRP) envisioned by President

Duterte’s administration, which seeks to correct a number of deficiencies in the

tax system to make it simpler, fairer, and more efficient.

Expanding the VAT

The Philippines has one of the highest VAT rates but also the highest

number of exemptions in the Southeast Asia region. Consequently, the

Philippines collect the same amount of VAT revenues as a percentage of the

economy as that of Thailand despite only imposing a 7% VAT rate, while the

Philippines is at 12%.

TRAIN aims to clean up the VAT system to make it fairer and simpler and

lower the cost of compliance for both the taxpayers and tax administrators. This

is achieved by limiting VAT exemptions to necessities such as raw agriculture

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food, education, and health. This does not mean that the benefits the poor

rightly deserve will be removed. The Duterte administration commits to use the

budget to provide targeted transfers and programs that are more transparent

and accountable. The administration will direct the way to protect the poor and

vulnerable compared to the tax exemptions and blind subsidies that are

inefficient and largely beneficial to the rich since they have higher purchasing

power.

Increasing the excise tax on fuel and petroleum

"Fuel consumption more than doubles for farmers who fully rely on

pumps (397-413 liters/hectare), accounting for 29-30% of their total production

cost," the article stated.

Rice farmers normally consume 179 to 205 liters per hectare of fuel, which

accounts for 13 to 15 percent of their total expense.

According to PhilRice, rice farmers have to adopt mechanization and

water-saving technologies to cushion the ill effects of the TRAIN law.

The news come after the Office of the Solicitor General asked the Supreme

Court to junk petitions against the TRAIN law for lack of merit.

Solicitor General Jose Calida said "The government stands to lose P146.6B in

2018 from the lowering and restructuring of personal income tax. The TRAIN

Law is expected to provide P89.9B in incremental revenues for 2018, and

P786B within its first five years," in a tweet Monday citing the consolidated

comment on the petitions.

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THE TAX REFORM FOR ACCELERATION AND INCLUSION (TRAIN) ACT.

President Rodrigo Roa Duterte signed into law Republic Act No. 10963,

otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act,

the first package of the Comprehensive Tax Reform Program (CTRP, on

December 19, 2017 in Malacanang.

In a separate message, President Duterte has vetoed certain provisions

of the TRAIN. The vetoed five line items are the following provisions:

1. Reduced income tax rate of employees of Regional Headquarters (RHQs),

Regional Operating Headquarters (ROHQs), Offshore Banking Units (OBUs),

and Petroleum Service Contractors and Subcontractors;

2. Zero-rating of sales of goods and services to separate customs territory and

tourism enterprise zones;

3. Exemption from percentage tax of gross sales/receipts not exceeding five

hundred thousand pesos (P500,000.00);

4. Exemption of various petroleum products from excise tax when used as input,

feedstock, or as raw material in the manufacturing of petrochemical products, or

in the refining of petroleum products, or as replacement fuel for natural gas fired

combined cycle power plants; and

5. Earmarking of incremental tobacco taxes.

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The TRAIN raises significant revenues to support the President’s priority

social and infrastructure programs, which will help realize his administration’s

goal of reducing the poverty rate from 21.6 to 14 percent by 2022. Some 70

percent of the incremental revenues will help fund the government’s

infrastructure modernization program, while the balance will go to social

services.

Starting 2018, the government expects to raise funds equivalent to about

two-thirds of the incremental revenues targeted under this tax reform law. The

Congress has committed to pass the rest of the TRAIN’s provisions representing

the remaining one-third of the targeted revenues in early 2018 to help us

achieve our revenue and deficit targets.

With the people’s support and understanding, all these reforms will result

in more and better jobs, lower prices, and a brighter future for every Filipino.
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SYNTHESIS

The tax policy is essentially a balancing act between efficiency and

equity. People want to make the society a fairer place to live in so, they want to

impose progressive taxes. At the same time, Filipinos want to make sure that

the taxes does not reduce economic activities. Unfortunately, the Philippines' tax

system disproportionately burden the poor and benefit the rich, but they also

earn a too little revenue given the distortion they create.

According to the Department of Finance, TRAIN Law is the first step to

correct all our unfair, complex, and inefficient tax system. We will adjust and

update the personal income tax rates that burdened the ordinary employees

after 20 years. With TRAIN, the income tax payment of 99% of wage earners will

be lower. In contrast, those who are earning more than P8 million annually will

pay higher taxes at 35%, whereas the higher tax bracket before was 32%.

The government will give the poorest 10 million households a targeted

cash transfers of P200 per month in 2018 and P300 per month in 2019 and

2020, sourced from higher consumption taxes that the rich will contribute, as

well as better social services, healthcare, and education. All of these will prepare

the people for better job opportunities.

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The benefits of tax reform are productivity grows, economy expands,

wages increase, workers are better educated, increase in tax revenue,

companies will hire more.

The TRAIN Law aims to clean up the VAT system to make it fairer,

simpler, and lower the cost of compliance for both tax payers and tax

administrators. This will be achieved by limiting VAT exemptions to necessities

such as law agriculture food, education, and health. The administration will

protect the poor and vulnerable compared to the tax exemptions and blind

subsidies that are inefficient and largely beneficial to the rich since they have

higher purchasing power.

This new tax system, TRAIN, raises significant revenues to support the

President's social and infrastructure programs which will help his

administration's goal to realize the reducing of poverty rate from 21.6% to 14%

in the year 2022. The 70% of the incremental revenues will help fund the

government's infrastructure modernization program, while the balance will go to

social services.

The government expects to raise funds equivalent to about two-thirds

of the incremental revenues targeted under this tax reform law. And the people's

support and understanding will result all these reforms to more jobs, lower

prices, and a beaming future for every Filipino.

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CHAPTER 3

METHODOLOGY

This chapter provides the readers the procedure utilized in the study. The

chapter presents the details of the research design, research locale, population

and sample of the study, research instrument, data gathering procedures and

data analysis.

RESEARCH DESIGN

The TRAIN Law as perceived by social studies professors of University of

Makati is designed as a quantitative research. It used a descriptive survey

method used to assess a socio-demographic profile such as respondent’s name,

gender or sex and age. This is an exploratory research that aims to investigate

the perceptions of social studies professors with regard to the new tax system.

The strategies and methods used in the research is surveying to willing social

studies professors. Descriptive evaluation is important to identify the opinions of

the professors on the TRAIN Law. The self-made questionnaire is given to the

social studies professors of University of Makati about the perceptions of the

professors on the TRAIN Law.

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RESEARCH LOCALE

This study will be conducted in the Higher School ng UMak (HSU) which

lodged at the University of Makati (UMak) and is located at J.P. Rizal Extension,

West Rembo, Makati City. The University of Makati is one of the three

institutions in the country which piloted the Senior High School modeling

program of the Department of Education in 2012. The Senior High School

program under the Department of Education’s “K to 12” scheme in the University

of Makati (UMak) which was the first in Metro Manila to test the proposal to add

two years to the country’s basic education cycle. University of Makati also

consist of more than 5000 students.

POPULATION AND SAMPLING DESIGN

TRAIN Law as perceived by social studies professors of University of Makati

The study involved twenty (20) social studies professors of University of

Makati. The researcher will humbly conduct the professors to answer the self-

made questionnaire prepared by the researcher result will came fully tallied and

interpreted by the researcher.

RESEARCH INSTRUMENT/TOOLS

To give and collect as much information, descriptive method will be used.

This method involves the use of questionnaire. The instrument that are going to
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be use by the researcher are survey questionnaire. This questionnaire will use

as the main data gathering tool for this study. The survey questionnaire contains

what is the needed information that the respondents are able to answer.

The questionnaire consists of the following parts:

Part 1- Refers to the profile of the respondents.

Part 2- Pertain to the perception of the social studies professors on

TRAIN Law

DATA GATHERING PROCEDURE

In the conduct of the study, the researcher will give a survey

questionnaire personally to the social studies professors of University of Makati.

After answering the survey instrument, the researchers will collect and tabulates

on the date. The researcher statistical treatment techniques for interpretation of

all the data gathered.

DATA ANALYSIS

The data that will be collected needs to be analyze using quantitative

data analysis approach. Data will be collected by use of survey from twenty (20)

social studies professors in University of Makati consist of ten (10) professors

both in HSU and College. The gathered data through the use of survey

questionnaire is relevant to topic. The answers in the questionnaire was

summarized, tabulated and tallied.

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Chapter 4

Presentation, Analysis and Interpretation of Data

This chapter deals with the presentation, analysis and interpretation of

data gathered followed by a discussion of the research findings. The findings

relate to the research questions that guided the study. Data was analyzed to

identify, describe and explore the perception of social studies professors of

UMAK about the TRAIN law.

Profile of the Respondents

The characteristics of respondents have a very significant role to play in

expressing and giving the responses to the problem, which is about the

perception of social studies professors of University of Makati about the TRAIN

law. A total of 20 questionnaires were given.

Age Female Male Total

21-25 4 5 9

26-32 1 2 3

37-41 2 1 3

46-57 0 1 1

Table 1: Age Distribution of the Respondents

The data shows that nine (9) of the respondents fall under the age 21-25,

three (3) respondents fall under the age 26-32, three (3) respondents fall under

the age 37-41 and one (1) respondent falls under the age of 46-57.
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Yes No

13 7

Table 2: Awareness of the TRAIN law

15% A
B
85% C
D

Figure 1: Awareness of TRAIN law

The result of the question on how an individual aware on the TRAIN LAW,

85% or seventeen out of the total twenty respondents are aware of the TRAIN

LAW. Yes No

17 3

Table 3: Beneficiary of TRAIN law

35%
YES
65%
NO

Figure 2: Beneficiary of TRAIN law

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Whether individuals will benefit or not from the TRAIN law said. The graph

shows that 65% or 13 individuals will benefit from it.

Beneficiary Yes No

Indigenous people 13 7

People who earns 14 6

minimum wage

A business owner 13 7

An OFW member 16 4

Office workers 14 6

Table 4: Main Beneficiaries of TRAIN Law

0.9
0.8
R
E 0.7
S 0.6
P
O 0.5
N 0.4
D Yes
E 0.3
No
N 0.2
T
0.1
S
0
Indigineous People who A business An OFW Office
people earns owner member Workers
minimun
wage Survey Questionnaires

Figure 3: Beneficiaries of TRAIN law

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The result of the questions shows that the number one beneficiary of TRAIN

law is the OFW worker, which gained 80% or 16 out of 20 respondents, followed

by the people who earns minimum wage and office worker, which gained 70% or

13 out of the total 20 respondents. Moreover, the least are the indigenous

people and business owner, which gained 65% or 13 out of the 20 respondents.

Effects of TRAIN Law Always Sometimes Never

Higher excise tax on 8 2 10

cigarettes

VAT exemption 11 7 2

Higher excise tax on 13 3 4

gasoline and petroleum

Higher excise tax on 16 3 1

automobiles

Increasing of personal 10 6 4

income tax

Simplifying of estate 6 11 3

and donor’s tax

Withholding of income 10 7 3

tax

Revised tax on mineral 13 5 2

products

Table 5: Effects of TRAIN Law to the Respondents

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90%
R 80%
E 70%
S
P 60%
O 50%
N 40%
D
E 30%
N 20%
T Always
10%
S Sometimes
0%
Never

Survey Questionnaires

Figure 5: Effects of TRAIN Law to the Students

The result shows the new regulations of TRAIN LAW that the most

affected to the respondent is Higher excise tax on sugar sweetened beverages

which gained 80% or sixteen (16) out of twenty (20) respondents, followed by

Excise tax on automobiles which gained 70% or thirteen (13) out of twenty (20)

respondents, next are the Higher excise tax on gasoline and petroleum and

lowering personal income tax which gained 60% or twelve (12) out of twenty

(20) respondents, then the VAT exemption and simplifying of estate and donor's

tax which gained 55% or eleven (11) out of twenty (20) respondents, more over

the increasing the excise tax on automobiles and withholding of income tax
 HIGHER SCHOOL NG UMAK - UNIVERSITY OF MAKATI PAGE 28

which gained 50% or ten (10) out of twenty (20) respondents, and the least is

Higher excise tax on cigarettes which gained 40% or eight (8) out of twenty (20)

respondents.
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Chapter V

Summary, Conclusion and Recommendation

The purpose of this chapter is to summarize the study that was

conducted including the purpose of the study, a restatement of the research

questions, with the study results; conclusion and recommendations formulated

by the researchers for the readers.

Summary

This study was conducted with a goal of determining the perceptions

of the selected social studies professor in Higher School ng UMAK-University of

Makati about the TRAIN LAW. In addition, about the perception, this study also

determined which among the regulations of law affects the everyday expenses

of the respondents particularly the Higher School Ng UMAK social studies

professors.

A survey questionnaire was developed and given to the 20

respondents who participated in the study. All the respondents were asked to fill

up the given questionnaire with their own answer. The profile of the respondents

was presented and analyzed using the descriptive statistics such as the

frequency and percentage.

Profile of the Respondents. Majority of the respondents are between

21-57 years old, and mostly are Social Studies professors from University of

Makati.
 HIGHER SCHOOL NG UMAK - UNIVERSITY OF MAKATI PAGE 30

Professors Awareness of TRAIN law. Based on the findings with a 70 percent,

the respondents are mostly aware and will benefit from the new regulations of

TRAIN law because it will be easier for taxpayers to understand those liabilities

and to comply.

The researchers identified the most significant attribute that strongly

affects the taxpayers to the new regulations of TRAIN law. The OFW member

are mostly affects and will benefit from the TRAIN law.

Conclusion

The Tax Reform for Acceleration and Inclusion or commonly TRAIN Law

aims to provide ample funds for structures especially on Duterte's build, build,

build program. The program is good so long as it is strictly implemented and

regulated. It lessens the income taxes of employees and businesses, but a

death blows for some entities in the economic sector. This is because sweet

beverages and other unhealthy products are taxed more than the amount a

Filipino can afford of. The government said it is apt because of growing number

of obese people in the country. If this is so, then thumbs up for the government.

But, the reality is still there. While focusing on health issues, the idea of higher

taxes on sweet beverages has no direct implication in consumption.

Recommendations

The following recommendations as offered for the following:

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1. To the tax payers- this study will show that reforms to local taxation are

politically challenging, and therefore emphasizes that this is one area of public

policy that would benefit greatly from a period of cross-party agreement and for

local democracy.

2. To the sellers and suppliers- this study will serve as the basis as to the prices

affected by the reform law we have shown or ideal tax but there are better ways

to improve the tax system.

3. To the students- In this study, students will have the opportunity to

understand the effects of the reform law. They will also realize that the new tax

system in favorable in their behalf.

4. To the senior citizens - This will help senior citizens to recognize the different

weights to the consideration set out on each of the tax options and will therefore

draw different conclusions.

5. To the workers - This study is to help workers identify the taxes based on the

property, land, and income are the potential tax mechanism that have the

revenue raising capacity to match the present system.

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6. To the future researchers - This study will help them in their study regarding

the new tax system. This will also serve as broadening to the study of the reform

law. A good and useful information could be exerting from this study.