La Salle Academy

Br. Raymund Jeffrey Road, Iligan City, 9200

Senior High School Department

A.Y. 2019-2020

In partial fulfillment of the requirements in Practical Research 1

Correlation of TRAIN Law and the Poverty Rate of Sari-sari Stores in Iligan City

Submitted by:

Bonachita, Jay Paolo C.

Cabrera, Clestlin C.

Gonzales, Natasha Julia C.

Pundogar, Nurlailah P.

Teofilo, Maria Jenny Rose J.

Submitted to:

Ms. Elaine Mae C. Casia

December 2019
 Title
1.1 TRAIN Law: A year in Author: Tan, M.
review Year Published: 2019
Summary/Findings:
Tax Reform for Acceleration and Inclusion
(TRAIN) Act was established to address the fiscal crisis in
today's modern world. TRAIN reduces deficits and debts
to reduce poverty and the inequality of opportunity to the
people. However, there is a significant increase with the
country’s inflation rates. Revenues can be used to finance
infrastructure and government services which can
improve economic productivity. The TRAIN legislation is
not the sole cause of these higher prices, naming the
country's surplus of rice as a major inflationary contributor
in 2018. According to Social Welfare acting Secretary
Virginia Orogo, poor families cope with the economic
effects of the TRAIN Law which programs provide
discounts for all subsidies. TRAIN Law also aimed to
excise tax fuel in increasing the prices and have been the
main cause of the country’s continuously skyrocketing
inflation.
2. Seeing the TRAIN Law in Author: Bernardo, R.
its proper perspective Year Published: 2019
Summary/Findings:
TRAIN is the first of five packages of the
comprehensive tax reform program. It has yielded certain
benefits to the country’s economy, which lowers the cost
of borrowing and attracts investments. However, unfair
criticism against the law has sprouted. They focus on the
tax impact on marginalized sectors, but fail to consider the
public spending and higher growth that will benefit all,
especially the poorest. Public expenditure studies show
that the poorest segments gain the most from social
spending (e.g. education and health) and infrastructure,
immediately and especially over time as these investments
create jobs and raise incomes. The next step the
government must focus on in the tax reform is to increase
sin tax.
3. TRAIN Law: How was it Author: Abrea, M.
implemented? Year Published: 2018
Summary/Findings:
The first, and perhaps the most important part of
the tax reform, is the lowering of the personal income tax.
Many issues in implementing the TRAIN Law has
surfaced. Difficulties rise from availing tax percentages.
Regulations contain of the income tax, excise tax, value-
 added tax, documentary stamp tax, and many others.
Releasing such regulations will take some time and
transitory procedures. The best thing to do is for taxpayers
to remain vigilant and educated about the law.
4. Tax Changes You Need to Author: National Tax Research Center
Know: Republic Act No. Year Published: 2018
10963 Tax Reform for Summary/Findings:
Acceleration and Inclusion RA 10963 reschedules the personal income tax
(TRAIN) (PIT) through exempting earners with a net annual income
not over Php 250,000.00 to contribute for the income tax.
It also implemented changes to the estate tax rate, donor’s
tax, and value-added tax. It also reformed excise tax on
automobiles, petroleum products, sweetened beverages,
cigarettes, and mineral products. It also reformed the
documentary stamp tax and other taxes such as the Foreign
Currency Deposit Unit (FCDU), capital gains of non-
traded stocks, Stock Transactions Tax (STT), and on
cosmetic procedures.
5. Policy Analysis on R.A. Author: Gem, J.
10963 (TRAIN law) of the Year Published: 2018
Philippines Summary/Findings:
Tax Reform for Acceleration and Inclusion
(TRAN) Law is aimed to reconstruct the tax system of the
country to be simpler, fairer, and more efficient. It was
proposed by the senates and the House of Representatives
in congress, and it was signed and approved by the current
president of the Philippines, Duterte. The president
appointed BIR and DOF for its effective implementation
and its rules and regulations and advisories to shed light on
the implementation of the changes introduced under train
law. Generally, government implemented TRAIN because
they want to see a lesser tax weight on the poor and middle
class.
6. Poverty to fuel growth of Authors: Dagooc, E.
sari-sari store sector Year Published: 2017
Summary/Findings:
Home-based micro-enterprises cannot be closed
abruptly since most of the cities in the Philippines are
cornered with different sari-sari stores that allows
neighborhood to have an easy access to their basic needs.
But the entries of convenience stores are somehow a threat
of sari-sari stores.
Sari-sari stores are frequently called to improve
their businesses, if not; the highly capitalized convenience
store will eventually cover these home-based micro-
enterprises. Philippine Retailers Association (PRA-Cebu
 Chapter) president Robert Go also agreed with
Concepcion, saying the home-based entrepreneurship,
particularly the sari-sari store concept, may be affected by
the strong inflow of convenience store investments across
the Philippines, but this business is still seen to survive in
long term.
Go, who owns prince retail group said that
business of sari-sari store may shrink mostly in the urban
areas, but it will still thrive in the barangay and rural areas.
7. Distribution and Author: Funahashi, T.
consumption in the Base of Year Published: 2013
the Pyramid (BOP) Summary/Findings:
market: The case of Sari- The Base of the Pyramid (BOP) is an economic
Sari stores in the term referring to society income earner, whereas, the
Philippines potential growth of BOP markets has been largely
overlooked in developing countries. Several researchers
have explored BOP markets in response to the recent
recognition of their cross-signing potential. The number of
studies is small; however, it needed more research to better
understand the nature and economic importance of BOP
markets.
Sari-sari store is a retailer whose owner runs the
business and maintains accounts. These are typically
located in lower-income areas and have contributed to
society by preserving the economic independence of the
storekeepers, creating jobs and most importantly providing
a range of consumer with items required. The supply of
necessary goods to poor customers, sari-sari stores are
indispensable in all regions in the Philippines for the
purchasing activities of the BOP segment.
8. TRAIN, inflation may put Author: Rosales, E.
‘sari-sari’ stores out of Year Published: 2018
business Summary/Findings:
Increasing prices of commodities could compel
owners to close down their sari-sari stores. They said the
introduction of new taxes early this year and now higher
inflation make it doubly hard for them to survive, as they
saw their sales decline by as much as 50 percent. A store
owner from Taguig City said she used to earn around
P5,000 daily from her sari-sari store. However, as prices of
goods surged unprecedented levels the past months, her
everyday sales went down to an average of P2,500.
9. Taxes on sugary drinks Author: Dela Paz, C.
hurt sari-sari stores – Year Published: 2018
survey Summary/Findings:
A Nielsen study shows consumers have been

10. The Effects of Newly-
Implemented Train Law
on Consumers’ Buying
Decision of Coke in
Potrero, Malabon
11. Small Businesses are
TRAIN Law Beneficiaries
12. IN CHARTS: Carinderia,
Sari-Sari store owners feel
pinch of inflation
drinking less sugary drinks and even taking items out of
their grocery baskets, as prices rose with the
implementation of the tax reform law. The Nielsen Retail
Index study called "Kamusta si Juan at Aling Nena"
showed that in sari-sari stores, all 5 sugar-taxed beverage
categories showed a faster sales decline of an average of
8.7% in February 2018, from 4.4% in February 2017. The
research firm's study also showed that powdered juice
being sold in sari-sari stores slid by 15.4% in February
2018, from 1.7% in February 2017, while powdered tea
sales declined by 18.1% from 3.4%. Nielsen also said the
sales of carbonated soft drinks in sari-sari stores declined
faster by 7% in February this year, from only 4.1% in the
same month last year.
Authors: Isaguirre, R., Medina, D.
Year Published: 2018
Summary/Findings:
The research shows the impact of Coke's customer
purchasing decision when faced with such a tax, also
known as the TRAIN law. The research was evaluated
using four factors influencing consumer buying decision
such as economic effect whether positive or negative,
price hike, safety dimension and income. This research
indicates that TRAIN Law may have a positive or negative
effect on consumers buying decision. Also, there is a
significant relationship between economic impact, price
increase, health aspect, income and advertisement in terms
of buying decision.
Author: Dela Cruz, A.
Year Published: 2018
Summary/Findings:
Small businesses are also beneficiaries of the new
law. Under the TRAIN law, the tax threshold for micro,
small and medium enterprises (MSMEs) was raised from
P1.5 million to P3 million. MSMEs with gross sales below
the threshold can choose to pay a flat rate of just 8%
instead of paying the regular income tax.
For example, a sari-sari store that makes P500,000
in gross sales a year would have to pay P52,500 in taxes
under the old rules. With the new rules, the store’s tax bill
will go down to P25,000 using the lower income tax or
P20,000 using the flat tax.
Author: Rivas, R.
Year Published: 2018
Summary/Findings:
Based on the article, micro-retail businesses are
 complaining of the rising cost of goods or products caused
by train law that affects their income or profit, and the
number of customer’s consumption is also decreasing.
According to PASCO President Vicky Aguinaldo, the
ongoing inflation rate hike is racking up commodity prices
even higher, which could cause the micro-enterprises to
shut down. Data from the Philippine Statistics Authority
(PSA) reported that food and non-alcoholic beverages
climbed to 9.7% which is the highest since March 2009.
Some of the areas also that are directly hit by Typhoon
Ompong registered higher prices of vegetables and the
prices of fish also increased.
13. TRAIN Law: Challenges Authors: Archog, D., Kiwas, D., Tecgongan, H.
and Adoption Strategies of Year Published: 2019
Business Owners Summary/Findings:
The study shows the different challenges
experienced and adaptation strategies made by business
owners. From the results of the study, the highest result of
challenges that business owner’s encounter is the increase
in selling price products due to the increase of prices set
by the supplier. It is because of the higher excise tax on
fuel and other products that they sell. Increase in selling
price of products due to the increase in the corresponding
tax rate and decrease in profit due to the increased prices
of goods are also include in the highest mean or result
from the study. This shows that the implementation of the
TRAIN law is perceived to be quite severe.
14. Stakeholders’ Perspective Authors: Bonghanoy, C., Etcuban, J., Bueno, N., Medio,
on the Implementation of G., Capuno, R., Capuyan, D.
Train Law in Cebu City, Year Published: 2019
Philippines Summary/Findings:
The Tax Reform for Acceleration and Inclusion
(TRAIN) is the principal bundle of the Comprehensive
Tax Reform Program (CTRP) imagined by the Duterte
organization to address inadequacies in the economy in
order to bring improvement to the country. This, however,
affects several segments in the economy, such as the
workers and the shoppers. The study gathered opinions
from various sectors in the local economy of Cebu City.
The study revealed that the effect on the imposition of
TRAIN Law towards the consumers was moderately
evident in terms of the affordability of the necessary goods
and services, while in terms of the affordability of non-
essential commodities, the effect or impact was only
slightly evident. It was concluded that TRAIN is still
premature; the people still perceived that there is already
 an improvement in the delivery of public services and
infrastructures.
15. Effects of Tax Reform for Authors: Mangondato, S., Cabalida, J., Ibrahim, N.,
Acceleration and Inclusion Mimbantas, N., Sagarino, C., & Maneja, M.
Law to the Sales in Pala-o Year Published: 2019
Public Market. Summary/Findings:
The research found that most of the affected
vendors regarding their sale performances are grocery/sari-
sari stores and meat shops since such stores continuously
have to increase their prices due to the inflation rate since
the TRAIN Law has been implemented. Before the
implementation of the law, their sales performances were
high and productive, and their products were affordable
and enough to meet the demands of the customers. After
its implementation, the productivity decreased due to the
inflation rate. It was also found that most of the store
owners of the Pala-o market in Iligan City are unaware of
the implementation of the law and its background.
16. TRAIN law hurt lower- Author: Ordinario, C.
income folk more Year Published: 2019
Summary/Findings:
Based from the article, the poverty incidence rose
under the changes on excise taxes across all sectors. In
TRAIN 1, tax reach higher earners, which the average
effects of tax compensation income will decline. TRAIN
also has an impact on the poor households where
governments require providing unconditional cash transfer
a month. Personal income tax may fall below its target
revenue loss. The TRAIN Law, as laid down in Republic
Law 10963, aims to simplify the country’s tax system by
rising personal income tax rates. It aims to change excise
taxes on fuel, car, and sugar sweetened beverages, and to
widen the tax base by eliminating exemptions from value
added tax.
17. The TRAIN Law worsened Author: Punongbayan, J.
poverty, inequality Year Published: 2019
Summary/Findings:
Based from the article, it shows that studies
demonstrate TRAIN law can likely worsen poverty and
income inequality in the country. The article also shows
that tax reform can be a tool for government to level the
incomes of the rich and the poor, yet the data suggest the
opposite happened with TRAIN law. But it also suggests
that in any case, TRAIN law can still be corrected if
government spends the people’s money progressively.
18. Train: A new wave of war Author: Ortega, A.
 against the poor Year Published: 2018
Summary/Findings:
With the new tax reform law in land, Filipinos’
lives, especially middle-class citizens and poor sectors, are
the stakes as they will be asked to make further sacrifices
and pay more to fund the government program. Several
company employers are now uncomfortable, noting that
they have not incorporated the sudden shift into their plans
and marketing strategies. Prices of goods and those
unaffected by the excise tax, have soared. TRAIN will
gravely hurt the poor, and it was known to the
administration from the start. The major component of the
new law is the reduction of citizen’s personal income taxes
where individual with a taxable income of 250,000 pesos
or less is now excluded from income tax and those with a
taxable income of more than 250,000 pesos would be
subject to tax rate of 20 to 35% effective this year and 15
to 35% effective in 2023.
19. TRAIN to push prices, Author: Lorenciana, C.
affect poor households Year Published: 2018
Summary/Findings:
Upon the implementation of the first package of the
tax reform program, a top retail industry official has
warned that the law could significantly push up prices of
basic products, particularly affecting those living below
the poverty line. Under the Republic Act 10963, the Tax
Reform for Acceleration and Inclusion (TRAIN), which
was signed by President Duterte on Dec. 19, 2017, a P6
excise tax per liter is imposed on caloric and non-caloric.
Taking home pay would increase on the part of the
employees, this will only be offset by rising prices due to
higher excise on gasoline and coal. Philippine Retailers
Association-Cebu President Robert Go said the heightened
excise tax on sweetened beverages will have a huge impact
on poor consumers’ daily consumption.
20. First quarter of TRAIN: A Author: Bulatlat
preview of the worse to Year Published: 2018
come for the poor Summary/Findings:
Based from the article, on January 2018
implementation of the first package of the Duterte
administration’s Tax Reform for Acceleration and
Inclusion (TRAIN), many ordinary folks join in bearing
the impact of price hikes. The law has contributed to price
swelling in oil products, food, grocery items, sugar
sweetened beverages, electric charges, and other goods and
services which result to the plight of the six poorest
income deciles earning below the family living wage
begun to worsen because of TRAIN law and in additional
taxes on oil and sugar.
 Synthesis

In 2018, the Comprehensive Tax Reform Program (CTRP) took effect under the
administration of Philippine President Rodrigo R. Duterte. The TRAIN, or the Tax Reform for
Acceleration and Inclusion, is the first package of the Duterte administration’s tax-reform
program. It exempted workers with a net annual income of P250,000 and below from paying
personal income tax, but imposed additional taxes on oil, sugary drinks and automobiles, among
others (National Tax Research Center, 2018).

Among the different sectors of the economy, retail outlets are one of those that are largely
affected with the tax reforms. An example would be “sari-sari” stores or neighborhood sundry
stores. Such micro-enterprises serve as outlets for a variety of products. Sari-sari stores are
typically located in low-income areas. This preserves the economy through providing jobs and
maintaining consumers through a variety of products (Funahashi, 2013). However, sari-sari
stores are threatened by the rise of convenience stores (Dagooc, 2017). TRAIN Law becomes a
potential difficulty for the stores, too. Some of the products they sell fall under the excised taxes
by the TRAIN Law. This would be hard for sari-sari store owners to survive. As costs increases,
profits decrease. The tax reform resulted to the inflation of certain prices of products and would
make it difficult for sari-sari stores to earn more. Sales would decline at about 50% (Rosales,
2018). One of these products would be the sweetened beverages, such as sodas. The
implementation of the tax reform has resulted to customers refraining from buying such products
because of its increased price. Consumer behavior is altered due to inflation (Dela Paz, 2018;
Isaguirre & Medina, 2018).

The implementation of TRAIN Law has largely affected micro-enterprises. There is an

increase in expenses, leading to lesser profit and a change in the affordability of the products that
they sell, also resulting to a decrease in consumer consumption (Rivas, 2018; Archog, Kiwas, &
Tecgongan, 2019; Bonghanoy et al., 2019; Mangondato et al., 2019). However, there is an
opposition against this perspective. Dela Cruz (2018) argues that, as compared to the previous
income tax or flat tax, the tax reform offers lower taxes. This is beneficial to smaller enterprises
since availing the 8% flat rate requires maximum value-added tax (VAT) equal to Php
3,000,000.00, as compared to the previous Php 1,500,000.00. Also, the taxable income is
increased to Php 250,000.00, as opposed to the previous Php 10,000.00. It is still in question as
to whether or not the implementation of the tax reform positively or negatively affects the sales
of sari-sari stores.

The implementation of TRAIN Law affects different social sectors in the country.
Ordinario (2019) stated that the law has affected different people as it increased the taxes of the
lower-income folk. The law suggested that it can be a tool for lowering the amount of taxes
being added by the government, but data suggested the opposite. Thus, it resulted to income
inequality (Punongbayan, 2019). A new wave of war against the poor is bound to occur since
they are asked to pay more funds to the government. Prices of products have also risen, resulting
to more expenses that will hurt the poor (Ortega, 2018). In implementing the first package of the
tax reform program, a top official in the retail industry has cautioned that the law could
significantly push up basic product prices, especially affecting those living below the poverty
line (Lorenciana, 2018). In the first package of the Duterte Administration's TRAIN program,
many ordinary people joined in bearing the consequences of price hikes. The legislation has
contributed to price increases in oil products, sugar-sweetened beverages, electricity charges and
other goods and services resulting in the worsening of the six lowest incomes (Bulatlat, 2018).