RESEARCH PAPER No.

2018 -

THE IMPACT OF TAX REFORM FOR ACCELERATION AND

INCLUSION (TRAIN) LAW TO THE BUDGETING OF THE MINIMUM
WAGE EARNERS IN BAGUIO CITY

Dwight Rychl R. Catabay, Mariel Anne C. Aficial, Mariah Alondra L. Jovero,

Kimberly C. Riño, Kristel Joy C. Terceño and Zandro W. Payocong, CPA

ACCOUNTING RESEARCH

We envision Saint Louis University as an

excellent, missionary, and transformative
educational institution zealous in the
formation of human resources who are
imbued with the Christian spirit and who are
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SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING

AND INFORMATION STUDIES
SAINT LOUIS UNIVERSITY
PHILIPPINES

December 2018
 Saint Louis University
School of Accountancy and Business Management
Department of Accountancy

APPROVAL SHEET

This thesis entitled “THE IMPACT OF TAX REFORM FOR ACCELERATION AND INCLUSION
(TRAIN) LAW TO THE BUDGETING OF THE MINIMUM WAGE EARNERS IN BAGUIO
CITY” has been prepared and submitted by Dwight Rychl Catabay, Mariel Anne Aficial, Mariah
Alondra Jovero, Kimberly Rino and Kristel Joy Terceno in partial fulfillment of the requirements for
the degree Bachelor of Science in Accountancy and Management Accounting has been examined and is
recommended for acceptance and approval for oral examination.

Zandro W. Payocong, CPA

Adviser

PANEL OF EXAMINERS

Approved by the Committee on Oral Examination on November 23, 2018 with a grade of
____________.

Jomari Casem, CPA

Chairperson

Erlinda G. Bialno, CPA Zandro W. Payocong, CPA

Member Member

ACCEPTED AND APPROVED in partial fulfillment of the requirements for the degree
Bachelor of Science in Accountancy and Management Accounting.

ALLAN FRANK B. SILVA, CPA, MSBA REYNALDO S. BAUTISTA, DM

Head, Department of Accountancy Dean

Page 2
THE IMPACT OF TAX REFORM FOR ACCELERATION AND INCLUSION (TRAIN) LAW TO
THE BUDGETING OF THE MINIMUM WAGE EARNERS IN BAGUIO CITY

Dwight Rychl R. Catabay

09164858427
dwightcatabay@gmail.com

Mariel Anne C. Aficial

09275575701
mariel.anne.aficial@gmail.com

Mariah Alondra L. Jovcro

09153249883
joveroalondra@gmail.com

Kimberly C. Riño
09997080384
rinokimberly@gmail.com

Kristel Joy C. Terceño

09363350133
kristelterceno@gmail.com

Zandro W. Payocong, CPA

School of Accountancy, Management and Computing and Information Studies
Saint Louis University

Keywords:
TRAIN Law, Minimum Wage Earners, budgeting, spending, saving, expenses, age, gender and civil status

ABSTRACT: The research aimed to determine the Impact of TRAIN Law to the budgeting of the Minimum Wage
Earners in Baguio City. The study seeks to answer the following; 1. What is the profile of minimum wage earners
according to sex, age, and civil status; 2. What is the impact before and after the implementation of the TRAIN Law
to the minimum wage earners, and 3. What are the significant differences if the respondents are grouped in
accordance to their profile. The researchers used descriptive and comparative method of research. The data was
gathered by distributing questionnaires to 100 minimum wage earners in Baguio City. Based on the results obtained
from the study, the researchers concluded that most of the expenses have an average impact due to the increased
prices of goods.
Introduction 2014). With an aim to pursue a simpler, more
efficient, and more equitable tax, the Tax Reform for
According to the Benefit-Received Principle, the Acceleration and Inclusion (TRAIN) Law is signed
purpose of taxation is to pay for government services into law by President Rodrigo Duterte. According to
and people pay taxes in proportion to the benefits the Department of Finance (DOF), it lessens the tax
they receive from government spending. burden among the poor and the middle class and
Governments impose charges on their citizens and includes more inclusive growth, improved public
businesses as a means of raising revenue, which is services; safe, healthy, and peaceful communities,
then used to meet their budgetary demands. This more money in the people’s pockets, and a more
includes financing government and public projects as comfortable life for all. It addresses several
well as making the business environment in the weaknesses of the previous tax system by lowering
country conducive for economic growth (Klein, and simplifying personal income taxes, simplifying
estate and donor’s taxes, expanding the value-added

Page 3
tax base, adjusting oil and automobile excise taxes,
and excise tax on sugar-sweetened beverages.
According to the Department of Finance, increase on
excise tax is embodied under economic justifications
provided by the law. Excise on sugar-sweetened
beverages is a health measure meant to discourage
the consumption of these beverages due to their high-
sugar content. From that, industry players are
encouraged to develop healthier alternative products.
Annually, some P145 billions of government
revenues are draining because of oil tax rates that
were unadjusted since 1997. Thus, oil excise tax rates
were also increased. The need to increase oil excise
tax lies in the reason that it is a highly progressive tax
since those who consume more will pay more tax
compared to those who consume less. Excise tax on
automobiles were simplified and it remains that more
expensive cars are taxed higher compared to those
cheaper ones. Tobacco excise tax was also raised and
by 2024 onwards, an annual 4% increase will be
imposed. Excise tax on mineral products and on
cosmetic procedures were also imposed as well.
According to the Department of Finance (DOF),
TRAIN has increased the incomes or spending power
of Filipino consumers to cope up with the rise of
inflation which happens in fast growing economies.
The rise to a demand and consumption leads to spike
in inflation. Yet the annual inflation in the Philippines
rose to unexpected higher rate compared to previous
years. The inflation in the Philippines is 6.4% as of
August 2018 above market estimates of 5.9% from
5.7% in the previous month. This was the fastest and
highest since March 2009, when the inflation hits
6.6% during the administration of Arroyo.
The cost rose in alcoholic beverages and tobacco
(21.6 percent from 21.5 percent); furnishing,
household equipment and routine maintenance (3.5
percent from 3.3 percent); health (4 percent from 3.7
percent); restaurant & miscellaneous goods and
services (4 percent from 3.7 percent) and recreation
and culture (2.4 percent from 0.9 percent). Annual
mark-ups were observed in the following: Rice
(4.7%);Corn (14.1%); Other Cereals, Flour, Cereal
Preparation, Bread, Pasta and Other Bakery Products
(2.4%); Meat (5.0%); Vegetables (8.6%); Sugar, Jam,
Honey, Chocolate and Confectionery (3.9%); and
Food Products not Elsewhere Classified (3.1%).
(CNN Philippines, July 2018) Kalinga reached the
highest inflation rate at 5.1 percent followed by
Benguet at 4.2 and Ifugao with 3.6. According to
PSA-CAR, year-on-year inflation rate of food and
non-alcoholic beverages in the region accelerated to
4.7 percent from 0.1 difference compared in the same
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period last year. Alcoholic beverages and tobacco had
the highest inflation among other commodities in the
region with 14 percent followed by transport with 5.3
percent. Food items such as vegetables (11. 8
percent), corn (11.3 percent) and meat (6.3 percent)
have the highest price increase in May this year.
In addition to that, the research entitled, “Analysis of
the Impact of Changes in the Prices of Rice and Fuel
on Poverty in the Philippines”, stated that with the
increase of price of fuel, a lot of sectors will be
affected, especially, those which are directly
dependent on these products. Relatively large price
increases are also recorded for the transportation
industry, including air transportation and public
utility cars and taxicab operations. Prices of jeepney,
tricycles and other road transport and bus line
operation also increased. The increase in the prices of
road transportation such as jeepney, tricycles and
buses could affect the middle-income and poor
households more since they are the ones who
consume much on these services.
Finance Assistant Secretary Paola Alvarez asserted
that the recent oil price hike to the rising world oil
prices and the weakness of the peso are one of the
causes of the increase of inflation. “The good thing,
though, is the higher revenues generated by the
TRAIN has enabled the government to put in place
various measures, such as personal income tax (PIT)
cuts, unconditional cash transfers (UCTs) and
transport subsidies, which have put more money into
the hands of consumers to more than cover for the
slight increase in prices,” Alvarez said. Rosemarie
Edillon, undersecretary of the National Economic and
Development Authority (NEDA), said “the rising
inflation is also partly caused by having more money
in the economy chasing after fewer goods.” The
higher take-home pay causes an increase in demand.
Thus, “Demand is outstripping supply,” and
“Therefore there is a need to increase capacity.”
Finance Secretary Carlos Dominguez III said that
cigarettes and sugary drinks are intended to be
expensive because of health reasons.
There is a great effect on the people’s budgeting
because of the price increase that has been going on.
Since the previous researches are only about
household budgeting, we focused on a specific group
which are the minimum wage earners.
Minimum wage earners are those who are greatly
affected because of the current situation. They are the
workers in the private sector paid the statutory
minimum wage or to an employee in the public sector
with compensation income of not more than the
statutory minimum wage in the nonagricultural sector
where he/she is assigned. (Republic Act 9504) The
erosion of wage’s purchasing power moved quickly
downwards by six percent in just a matter of two
months upon the effectivity of TRAIN in January.
(Associated Labor Union, March 2018)
Before the implementation of TRAIN law, industries
in Baguio City who have 11 or more employees was
earning a minimum wage of P300 which includes a
P15 cost of living allowance (Cola), while other
sectors who have 10 or fewer employees were
earning a minimum wage of P285 which already
includes a cost of living allowance of 15. This 2018,
the Cordillera Regional Tripartite Wages and
Productivity Board has issued Wage Order 19,
providing for P20 and P30 increase in the minimum
wages of workers in the Cordillera Region. It was
approved by the National Wage Commission on July
31, 2018. The effectivity took after 15 days from
August 5, 2018. As implemented, there is an increase
of PHP20 in the minimum wage particularly in
Baguio City, and the town of La Trinidad in Benguet
province. However, there was an increase of P30 in
some other areas in CAR region. As a result, the
minimum wage in Baguio City and La Trinidad
became P320.
Considering that they are earning a minimum wage
only, no research was conducted regarding their
budgeting. According to the research, “Budgeting as
means to Household Finances”, budgeting is not just
about restricting spending and living a cheapskate
life. It is about insights, wisdom, informed decisions,
action and sustained discipline when it comes to
household financials. People with a financial plan
tend to save more money, feel better about their
progress, and make more appropriate decisions.
Budgeting plays the biggest key in managing well the
money. Budgeting can actually save you money and
allow you to have more to spend by helping you to
make the most of your money. (Catwell, 2013)
Jeremy Vohwinkle (2012) suggested creating a
budget to take control of the money so that it does not
control you. He also extends that spending too much
money on one expense may make a shortage on
another expense which would yield results that are
less than expected.
According to the study “Analysis of Household
Spending Patterns”, it enumerated the following
household expenses such as food, shelter,
transportation, health care, utility, leisure and
entertainment, education, personal care, household
Page 5
equipment, life insurance, personal care, tobacco,
alcoholic and non-alcoholic beverages.
The expenses of an average Filipino family are rice,
meat, fish, fruits and vegetables, non-alcoholic
beverages, alcoholic beverages, tobacco, clothing and
footwear, house rent, electricity and water bill, gas,
health, transportation, recreation, communication,
education and personal care. (National Economic
Development Authority)
Budgeting differs because of certain factors. One of
which is budgeting by gender. According to the study
“Budgeting: Men vs. Women”, men and women are
fundamentally different, spend in different ways.
There are many reasons that a woman may spend
more on her food than a man does. Women are
spending more on their monthly shopping than men
are. One of the best-documented findings, with
evidence spanning many developing countries, is that
when women have greater control over the spending
of their households' resources, they devote a larger
share of spending to foster the potential of their
children and purchase household necessities. Theory
suggests a number of reasons why women might
have different savings preferences than men,
including the need to provide for a longer life
expectancy. Some evidence suggests that enhancing
women's control over resources does in fact lead to a
higher saving rate, but further study is needed to
draw any firm conclusions. (Janet G. Stotsky,2007)
Budgeting also differs by age. According to the
research “Budgeting Practices over the Life Cycle”,
as consumers age, both their level of spending and
the way they allocate their spending changes. Under
the age group below 35 they spend their income to
food away from home, alcoholic beverages, housing,
shelter, rent, apparel and services, transportation, and
education but the least allocation on health care, cash
contributions, personal insurance and pensions.
Under the age group 36-64, they had the highest
expenditure on personal insurance and pensions spent
and slightly more for alcoholic beverages. The 65-
and older group have the highest level of
expenditures in health care and cash contributions to
persons outside of the household, charities, churches,
and other organizations.
Being single or married also matters in the way one’s
budgeting is affected. In the research, “Civil Status
Budgeting”, singles in their early twenties apportion
a higher percentage of their budget to food, alcohol,
housing, and education. Married couples in their
early twenties spend a larger share of their budgets to
transportation, health care and entertainment. This study will determine the impact of TRAIN Law
Regardless of their marital status, persons in their late to the budgeting of the Minimum Wage Earners in
twenties earn more, spend more, are more likely to Baguio City.
have bachelor’s degree, and are more likely to own a
home. Specifically, it will determine the following:
1. The profile of minimum wage earners according
In making a budget, savings has an important role. to:
The simplest definition of “saving” that can be a. Sex
applied to all households is income minus b. Age
consumption in a year or other time period c. Civil Status
(Browning & Lusard, 1996). The purposes and
meanings of saving, however, are different for each 2. The impact before and after the implementation of
household, and are determined not only by income, TRAIN Law to the budgeting of the minimum wage
but by the need to accumulate consumable goods earners.
(Wärneryd, 1989).
3. The significant differences if the respondents are
According to the research, “Savings Goals and grouped into:
Saving Behavior From a Perspective of Maslow’s a. Sex
Hierarchy of Needs”, to better understand the saving b. Age
behavior of households, therefore, it is important to c. Civil Status
identify the attributes of each saving goal and the
influence of human needs on the likelihood of saving. Framework of the Study
The research “Explaining Filipino Households’ Conceptual framework
Declining Saving Rate” explains that one factor why
Filipino Households’ saving rate is declining because This study considers the profile of the Minimum
of higher inflation rate in the 2000s driven mainly by Wage Earners as the independent variable and the
a hike in oil and food prices, and negative real Impacts of Train Law to Budgeting as dependent
interest rate. The saving behavior might have been variable. The expected output of this study is to
affected by a shift in a precautionary motive of determine the impact of train law to budgeting of
Filipino households, as also suggested from the Minimum Wage Earners in terms of their profile.
cohort effects.
Figure 1. Conceptual Framework
Statement of the Problem

This study aims to answer the following questions:

1 What is the profile of the minimum wage earners INDEPENDENT VARIABLE
in Baguio City? Minimum Wage Earners (Profile)
a. Sex  Age
b. Age  Sex
c. Civil Status  Civil Status

2 What is the impact of TRAIN Law to the

budgeting of the Minimum wage earners in
Baguio City?

3 Are there significant differences if the

respondents are grouped into:
a. Sex
b. Age
c. Civil Status DEPENDENT VARIABLE
Impacts of Train Law to Budgeting
Objectives of the Study

Page 6

EXPECTED OUTPUT
Impacts on budgeting to minimum
wage earners due to Train Law in
terms of sex, age, and civil status.
Assumptions of the Study
 The interviewee answered the questionnaires
accurately.
 The respondents rated the situations
truthfully.
 The attitudes of the interviewee are stable.
 The subjects of the study appropriate in
relation to the respondents.
Research Hypothesis
Ho: There is no significant difference to the
budgeting of minimum wage earners in Baguio City
before and after the implementation of TRAIN Law
in terms of age.
Ho: There is no significant difference to the
budgeting of minimum wage earners in Baguio City
before and after the implementation of TRAIN Law
in terms of sex.
Ho: There is no significant difference to the
budgeting of minimum wage earners in Baguio City
before and after the implementation of TRAIN Law
in terms of civil status.
Significance of the Study
This study will provide information about the impact
of Train Law to the budgeting of the Minimum Wage
Earners This study could be beneficial especially to
the following:
Minimum Wage Earners: The study will guide and
inform the minimum wage earners in managing their
financial affairs.
Regional Tripartite Wages and Productivity
Boards & Government: The study will be used as
the basis for setting the sufficient minimum payroll
for Baguio Minimum Wage Earners.
Page 7
Future Researchers: The study will help them in
conducting their future researches about the impacts
of TRAIN Law, especially in terms of budgeting of
the minimum wage earners.
Scope and Limitations
The general intent of the study is to identify the
impact of the Tax Reform for Acceleration and
Inclusion (TRAIN) Law to the budgeting of the
minimum wage earners in Baguio City. The study
will be conducted in the different work
establishments in Baguio City wherein the
respondents are the Minimum Wage Earners. The
researchers focused on the factors that affect the
budgeting of minimum wage earners specifically
excise taxes on sugar-sweetened beverages and oil.
Research Design and Methodology
Research Design
The researchers made use of descriptive and
comparative methods of research in order to assess
the Impact of TRAIN Law to the Budgeting of the
Minimum Wage Earners. Comparative research
design was used since there is a need to know if there
are significant differences in the budgeting of the
Minimum Wage Earners before and after the
implementation of TRAIN Law and when they are
grouped according to age, sex, and civil status.
Population of the study
The target population of the study is Minimum Wage
Earners working in Baguio City. There is no data
available on the population of Minimum Wage
Earners in Baguio City from The Philippine Statistics
Authority (PSA) and The Department of Labor and
Employment (DOLE), so the researchers went around
different places Baguio City and obtained
information from the people whether they are
Minimum Wage Earners or not by asking them
directly.
Sample Design
Since there is no data available on the entire
population, the researchers made use of purposive
method of sampling wherein a sample is based on the
judgment of the researcher wherein he or she relies
on his or her own judgment when choosing members
of population to participate in the study. The
researchers believe that one hundred (100) Minimum
Wage Earners are needed as respondents of the study.
Data Gathering
The researchers used questionnaires as primary
sources of information for the study. The first part of
the questionnaires contains information on the age,
sex, civil status of the respondents. The second part is
a checklist wherein the respondents rate their food
and non-food expenses and savings before and after
the implementation of TRAIN Law.
The researchers went around Baguio City and floated
questionnaires to people who responded that they are
Minimum Wage Earners. The researchers assisted the
respondents in answering the questionnaires. Follow-
up questions were also asked in order to supplement
the answers to obtain clearer and more accurate
information from the respondents.
Statistical Treatment of Data
To describe the basic features of the data in the study,
the researchers used descriptive statistics. Frequency
table, simple mean, t-test (two means with equal
variances), One-way ANOVA and Likert Scale are
used in this study. The researchers used t-test (two
means with equal variances) in the sex and civil
status profiles because they wanted to know if there
are significant differences between 2 groups in terms
of sex and civil status groups in their budgeting
before and after the implementation of TRAIN Law.
The One-way ANOVA was used in the age profile
since the researchers wanted to test if there are
significant differences among the divided age groups
of the sample.
1. A frequency distribution is a tabular
representation of a survey data set used to
organize and summarize the data.
Specifically, it is a list of either qualitative
or quantitative values that a variable takes in
a data set and the associated number of
times each value occurs (frequencies). The
frequency distribution is the basic building
block of statistical analytical methods and
the first step in analyzing survey data. It
helps researchers (a) organize and
Page 8
summarize the survey data in a
tabular format, (b) interpret the data, and (c)
detect outliers (extreme values) in the survey
data set. (Lavrakas, 2008)
2. The simple or arithmetic mean is the
average value of the data; it is obtained by
adding the scores and dividing the sum by
the number of scores. Most often, this
particular average is referred to simply as
the mean. (Garambas, June 2015)
n
X́ =∑ xi
i=1
Wherein:
X́ = Mean
x i = the ith observation
n = Sample
3. The t-test is one type of inferential statistics.
It is used to determine whether there is a
significant difference between the means of
two groups. When the difference between
two population averages is being
investigated, a t test is used. In other words,
a t test is used when we wish to compare
two means (the scores must be measured on
an interval or ratio measurement scale).
4. The one-way analysis of variance (ANOVA)
is used to determine whether there are any
statistically significant differences between
the means of two or more independent
(unrelated) groups (although you tend to
only see it used when there are a minimum
of three, rather than two groups).
Table 1. Analysis of Variance for One Way
Classification
Source of Sum of Degrees Mean Computed Weight Statistical Descriptive
Variation Squares of Square f Value Limit Equivalent
Freedom 1 0.0100 - Very Low
0.1039
Column SSC k-1 SSC 2 0.1040 - Below Average
Means MSC= MSC 0.1979
k−1
f= 3 0.1980 - Average
MSE 0.292
Error SSE N-k SSE 4 0.2920 - Above Average
MSC=
N−k 0.3859
5 0.3860 - 0.47 Very High
Total SST N-1
Results, Findings and Discussion
k n
y . .2 1. Profile Of Minimum Wage Earners
SST =∑ ∑ y 2 ij− A. Age
i =1 j=1 N
k
Table 3. MWEs by age
y 2 i y ..2
SSC=∑ − Age Group No. of Respondents
i =1 ni N
17-22 25
SSE=SST −SSC 23-28 31
29-34 18
Where: 35-40 13
ni 41-46 8
= sample size per group 47-52 3
53-58 1
N = total number of observations 59-65 1
Total 100
k = number of groups
B. Sex
y .. = grand total Table 4. MWEs by Sex

y i = total of ith group/column Sex No. of

Respondents
Male 47
5. Likert scale is a psychological measurement Female 53
Total 100
device that is used to gauge attitudes, values,
and opinions. It functions by having a C. Civil Status
person complete a questionnaire that Table 5. MWEs by Civil Status
requires them to indicate the extent to which
they agree or disagree with a series of Civil Status No. of
statements. Respondents
Married 65
The difference between the mean of before Single 35
and after are described using Likert Scale. Total 100
The weight values, statistical limits and
interpretation are as follows: 2. Impact

Table 2. Likert Five-Point Rating Scale

Page 9
 Food, Beverages and Tobacco
Before After Impact Interpretation
2.175 2.3975 0.2225 Average
There is an average impact under food, beverages and
tobacco. Food includes rice, meat, fish, fruits and
vegetables. Food costs—for grocery shopping,
takeout, meal kits, and dining out—are frequently
flagged by financial planners as forms of
discretionary spending that can be reduced in a
household budget. (Earnest, 2017)
The non-alcoholic beverages industry encompasses
liquid refreshment beverages (LRB) such as bottled
water, carbonated soft drinks, energy drinks, fruit
beverages, ready-to-drink coffee and tea, sports
beverages and value-added water. The results can be
supported by the study conducted by the Bureau of
Labor Statistics about the 2013 Consumer
Expenditure in US, between 2000 and 2013, average
household spending on nonalcoholic beverages
purchased at grocery and convenience stores grew 2
percent, after adjusting for inflation. All of the
growth occurred between 2006 and 2013—especially
from 2010 to 2013, when spending on these items
grew 5 percent.
In the same study, they said that the biggest spenders
on alcoholic beverages are householders aged 45 to
54, who spend 22 percent more than the average
household on alcohol. However, this is in contrast
with our result since most of the minimum wage
earners are non-drinkers.
From the research “Tobacco Spending and its-crowd-
out of Other Goods”, their findings resulted that
households always spend more on alcohol than non-
smoking households regardless of income level.
Non Food
Before After Impact Interpretation
2.509 2.747 0.238 Average
Under the non-food expense, there is an average
impact after the implementation of TRAIN Law.
Non-food expense includes house rent, electricity and
water bill, gas and other fuel, clothing and footwear,
health and medical services, personal care,
transportation, communication, leisure and
recreation, and lastly education. In connection to
house rent expense, the study “Housing Rental
Study” concluded that most of the lessors do not
impose rental increase and sometimes the reason for
rental increase is because of the cost for repair and
Page 10
maintenance cost. The result to electricity expense
relates to the article “Power Rates seen go up” which
states that the signing into law of Train Law by
President Rodrigo Duterte will have a minimal effect
on the price of electricity in Baguio City and Benguet
Province.
Under the gas and other fuel expense, the results
relate to the research entitled “The Effects of
Changes in Prices and Income on Car and Fuel
Demand in Iceland.” When estimating the demand
for gasoline, the results were gasoline price and
income are the primary factors that control the
demand. In accordance to the study, the main results
are that when gasoline price goes up, the effects on
gasoline use decreases.
In clothing and footwear expense, Nielsen survey
states that 62% are spending less on new clothing.
According to an MWE, they do not prioritize buying
clothes since they have other expenses to spend on.
For health and medical services, this expense is one
of the fastest-growing categories of expenditures. The
continuing rapid rise in hospital costs, together with
an increase in hospital use by the population under
age 65 contributed to the continuing large increase in
outlays for this purpose.
For Personal Care, having a family to support,
personal care costs could be quite expensive. The
distribution of consumer expenditures on cosmetics
and personal care products in Canada, as of March
2018 in Canadian dollars. According to ProdegeMR,
some 49 percent of respondents stated that they spent
between 0 and 29 Canadian dollars on cosmetics and
personal care products.
For transportation expense, the expenditures
accounted for $1.20 trillion (9.3 percent) of PCE in
2016, making transportation the fourth largest
category (excluding “other expenditures”) after
healthcare, housing, and food. Recent increases in
fuel prices have heightened resulted to an impact of
rising vehicle operating expenses on household
transportation expenditures.
The increase in communication expense is due to the
inflation that surged to 6.4% that affected
communications expense in 2018.
The result in leisure and recreation relates to the
forecast of statistica.com in which they forecasted
that global airfares would increase by 3.5% that
discouraged them to book flights for leisure and
recreation in 2018. Also, there is an increase in fare
prices (from 1.40 to 1.55 for every succeeding
kilometer) that were applied in provincial buses.
Under the education expense, this agrees with George
Langelett’s research which states that the demand
elasticity for college tuition is -0.68 at a coefficient of
$8500, which states that it is inelastic. Inelastic
demand means a situation in which the demand for a
product does not increase or decrease
correspondingly with a fall or rise in its price.
Savings
Before After Impact Interpretation
2.0700 1.7600 0.3100 Above Average
Lastly, 37% and 38% respectively of the MWEs have
no savings before and after TRAIN law. For some
who have savings, it increased after TRAIN law in
the range of 250 pesos and below. From 15%, it
increased to 20%. This relates to the article from
“Factors Affecting Savings” which states that a factor
that affects savings is taxation in which TRAIN Law
has something to do. Taxes such as customs duty,
purchase tax and VAT are an obstacle to
consumption, thereby reducing its attractiveness and
making it more worthwhile to save.
3. Significant difference in budgeting if the
respondents are grouped by:
A. Age
Comparing the age groups of 17-22, 23-28, 29-34,
35-40, 41-46, 47-52, 53-58,and 59-64, there is no
significant difference in terms of their budgeting
under the rice, meat, other food, non-alcoholic and
alcoholic, tobacco, rent, gas, clothing, personal care,
transportation, communication, leisure and
recreation, education, and saving expenses since the s
range is higher than absolute mean difference. It is
inconsistent with the study “Spending Patterns by
Age”, there is a difference between the spending
pattern under the different age brackets in terms of
food in general, alcoholic and non-alcoholic
beverages and tobacco. There is also a difference in
terms of housing, utilities, fuel, transportation,
Page 11
household operations, apparel, health care,
entertainment, personal care products, education and
personal insurance.
Fish Expense
Comparing the age groups of 35-40, 47-52, 59-64 to
other age groups, there is no significant difference
in terms of their budgeting under the fish expense
since the s range is higher than the absolute mean
difference.
Comparing the age groups of 17-22, 23-28, 29-34,
41-46 to the age group of 53-58, there is a significant
difference in terms of their budgeting under the fish
expense since the absolute mean difference is higher
than the computed S range. But when these age
groups are compared to the rest of the age groups,
there is no significant difference since the S range is
higher than the absolute mean difference.
Fruits and Vegetables
Comparing the age groups of 47-52, 59-64 to other
age groups, there is no significant difference in
terms of their budgeting under the fruits and
vegetables expense since the S range is higher than
the absolute mean difference.
Comparing the age groups of 17-22, 23-28, 29-34,
35-40, 41-46 to the age group of 53-58, there is a
significant difference in terms of their budgeting
under the fruits and vegetables expense since the
absolute mean difference is higher than the computed
S range. But when these age groups are compared to
the rest of the age groups, there is no significant
difference since the S range is higher than the
absolute mean difference.
Electricity and Water
Comparing the age groups of 17-22, 35-40, 41-46,
47-52, 53-58, and 59-64 to other age groups, there is
no significant difference in terms of their budgeting
under the electricity and water expense since the S
range is higher than the absolute mean difference.
Comparing the age group 23-28 to the age group of
29-34, there is a significant difference in terms of
their budgeting under the electricity and water
expense since the absolute mean difference is higher
than the computed S range. But when both age
groups are compared to the rest of the age groups,
there is no significant difference since the S range is
higher than the absolute mean difference.
B. Sex
Table 6. Difference in budgeting of meat, fish, t stat Decision
other food expenses, non-alcoholic beverages and Alcoholic There is a significant
tobacco when grouped according to sex. Beverages difference
2.8136
t stat Decision
In this particular table, t-computed is greater than t-
Rice 0.9774 critical value. Thus, it failed to accept the null
Meat 1.0772 hypothesis. This means that there is a significant
Fish difference between male and female in terms of
1.2328
budgeting of alcoholic beverages. It is consistent with
Other the study, “Gender and Alcohol Consumption”,
food drinking per se and high-volume drinking were
expenses 0.8056 consistently more prevalent among men than among
Non- No significant difference women.
Alcoholic
Beverages Table 9. Difference in budgeting of rent, gas,
(coffee, electricity and water bill, as and other fuel, health,
juice, soft transportation, communication, education sex.
drinks
etc.) 1.5151 t stat Decision
Tobacco 1.1809 House Rent 1.4251
Electricity and
Under this table, t-computed is less than the t-critical Water Bill 0.4925
value, therefore accepts the null hypothesis. It means
Gas & Other
that there is no significant difference between male
Fuel 0.8586
and female in terms of budgeting of rice, meat, fish,
other food expenses, non-alcoholic beverages and Health and No significant
tobacco. Under food expense in general, men and Medical difference
women have difference in terms of spending and food Services 1.4044
preferences according to the article “Men vs. Woman Transportation 1.7759
Eating Preferences”. It concluded that men and
women have different preferences in non-alcoholic Communication 1.1353
beverages particularly soda, coffee and juice. It is Leisure and
also inconsistent with the study, “Gender Differences Recreation 1.1176
in Tobacco Consumption”, which states that men are Education 1.4415
more likely to use tobacco products than are women.
Under this table, t-computed is less than the t-critical
Table 7. Difference in budgeting of fruits and value, therefore accepts the null hypothesis. It means
vegetables when grouped according to sex. that there is no significant difference between male
and female in terms of budgeting of house rent,
t stat Decision electricity & water bill, gas & other fuel, health &
Fruits & There is a significant medical services, communication, transportation
Vegetables 2.0978 difference leisure & recreation and education. In relation to this,
according to the article “Home Habits & Preferences
Since t computed is greater than t critical value, there – Men vs Women”, men and women have different
is a significant difference between male and female preferences in choosing an apartment or house. Also,
in the budgeting of fruits and vegetables. In relation they have different home electricity habits. Men drive
to this, according to the study “Men vs. Women longer distances potentially leading to higher total
Eating Preferences” women, typically stereotyped as energy use by men (Kanyama- Raty, 2009).
the more health-conscious of the sexes, tend to order According to the article, “Mainstreaming Gender in
healthier foods more often than men. Road Transport”, women who have the resources to
do so will often drive or take a taxi rather than walk
Table 8. Difference in budgeting of alcoholic or use public transit because of fear of physical or
beverages when grouped according to sex. verbal harassment or attack. Men and women have
different calling patterns with women making fewer

Page 12
but longer calls than men on average (Friebel-
Seabright, 2011). Women have radically higher
lifetime medical expenses than men do, about one-
third higher, on average (Williamson, 2017). It has
been well established that there are gender
differences in leisure preferences and participation
and these gender differences may be related to
personality (Kleiber & Hemmer, 1981)
Personal Saving Behavior”, the study indicates that
differences in saving behaviors between men and
women.
C. Civil Status
Table 13. Difference in budgeting of rice when
grouped according to civil status.

Table 10. Difference in the budgeting of clothing t stat Decision

and footwear when grouped according to sex
t stat Decision
Clothing
There is a significant
and
difference
Footwear 3.5710
In this table, t-computed is greater than t-critical
value. This means that there is a significant
difference between male and female in terms of
budgeting of clothing & footwear It is consistent with
the study entitled “A Study of Clothing Purchasing
Behavior by Gender”, which states that male and
female consumers demonstrate considerably different
approaches in their decision-making and purchasing
behavior when shopping for clothing for a variety of
different reasons. Women spend more for personal
care and hygiene products than men. (Willet, 2015)
There is significant
Rice 3.7099
difference
The above table shows that there is a significant
difference between married and single in the
budgeting of their rice expense since t computed is
greater than the t critical value. Based on the study
“Spending Patterns and Income of Single and
Married”, people who are married spend more than
people who are single in terms of food in general.
Table 14. Difference in budgeting of meat, fish,
fruits and vegetables, other food expenses, non-
alcoholic beverages, alcoholic beverages and
tobacco when grouped according to civil status.
t stat Decision

Table 11. Difference in the budgeting of personal Meat 1.8156

care when grouped according to sex Fish 1.7379
t stat Decision Fruits &
Vegetables 1.7341
Personal There is a significant
Other food
Care 2.7743 difference
expenses 0.6160
There is a significant difference between the Non-
budgeting of male and female under the personal care Alcoholic No significant difference
expense. Women spend more for personal care and Beverages
hygiene products than men. (Willet, 2015) (coffee,
juice, soft
Table 12. Difference in savings when grouped drinks
according to sex. etc.) 1.2170
Alcoholic
t stat Decision Beverages 0.1960
Savings 1.1423 No significant difference Tobacco 0.6687

In terms of savings, t-computed is less than the t-
critical value, therefore accepts the null hypothesis. It
means that there is no significant difference between
the savings of male and female before the
implementation of TRAIN Law. It is inconsistent
with the study entitled, “Gender Differences in
In this part, there is no significant difference
between married and single in the budgeting of their
expenses in meat, fish, fruits and vegetables, other
food expenses, non-alcoholic beverages, alcoholic
beverages and tobacco since t computed is less than t
critical value. Based on the study “Spending Patterns

Page 13
and Income of Single and Married”, people who are Table 17. Difference in budgeting of leisure and
married spend more than people who are single in recreation when grouped according to civil status.
terms of food in general, beverages and tobacco.
t stat Decision
Table 15. Difference in budgeting of rent, gas, Leisure
health, personal care, transportation and There is significant
and
communication when grouped according to civil difference
Recreation 2.7116
status.
There is a significant difference between married
t stat Decision and single in the budgeting of the leisure and
House Rent 1.5480 recreation. It is consistent with the study, “The
Impact of Marital Status and Gender on Leisure
Gas & Other
Values of Older Adults” single may have leisure
Fuel 1.4358 values that are different than that of someone who is
Clothing and married.
Footwear 0.9602
Table 18. Difference in budgeting of education
Health and No significant when grouped according to civil status.
Medical difference
Services 0.4363 t stat Decision
Personal Care There is significant
0.0695 Education
4.6984 difference
Transportation
1.2597 There is a significant difference between married
and single in the budgeting of the leisure and
Communication
0.5285 recreation since t computed is greater than t critical
value. According to the study “Spending Patterns and
Again, since t computed is less than t critical value, Income of Single and Married”, people who are
there is no significant difference between married married spend more on education compared to people
and single in the budgeting of their house rent, gas, who are single.
clothing and footwear, health and medical services,
personal care, transportation, communication, and Table 19. Difference in savings when grouped
leisure and recreation. Based on the study “Spending according to civil status.
Patterns and Income of Single and Married”, there is
a significant difference between married and single in t stat Decision
terms of how they spend on shelter and dwellings, Savings 0.5735 No significant difference
gas, apparel, health services, transportation and
communication. In terms of savings, there is no significant difference
between married and single since t computed is less
Table 16. Difference in budgeting of electricity and than t critical value
water bill when grouped according to civil status.

t stat Decision Conclusion

Electricit
There is significant
y and
difference
Water Bill 3.5446
The above table shows that there is a significant
difference between married and single in the
budgeting of electricity and water bill since t
computed is greater than the t critical value. Based on
the study “Spending Patterns and Income of Single
and Married”, people who are married spend more
than people who are single in terms of utilities.
Based on the results and discussion of the study,
the researchers concluded the following:
1. The profile of the minimum wage earners
are grouped according to age, sex civil
status:
a.) There are 53 females and 47 males.
b.) There are 65 single and 35 married.
c.) There are 25 respondents from the age
group 17-22, 31 from 23-28, 18 from
29-34, 13 from 35-40, 8 from 41-46, 3

Page 14
 from 47-52, 1 from 53-58 and 1 from benefit is an increase in their salary which could help
59-61. their personal budgeting.

2. The overall impact of Train Law on the 2. Regional Tripartite Wages and Productivity
budgeting of the minimum wage earners is Boards & Government is recommended to conduct a
average. Under the food, beverages, tobacco
more extensive study about the TRAIN Law in order
and non-food expenses there is an average
impact. While for the savings there is an for them to address the appropriate salary for the
above average impact. minimum wage earners since there is a hike in the
inflation of goods.
3. There is a significant difference between the
budgeting of the respondents when grouped 3. The future researchers are recommended to
according to age, sex and civil status. further study the research to come up with more
accurate findings.
a. When the age group 53-58 is compared
to 17-22, 23-28, 29-34, 41-46 age
groups there is a significant difference
under fish expense. When 17-22, 23-28,
29-34, 35-40, 41-46 age groups is
compared to 53-58, there is a significant
difference in terms of their budgeting
under the fruits and vegetables expense.
While the age group 23-28 to the age
group of 29-34, there is a significant
difference under the electricity and
water expense. There is no significant
difference on the remaining expenses.

b. There is a significant difference

between the budgeting of male and
female under fruits and vegetables,
alcoholic beverages, clothing and
footwear, and personal care expenses.
There is no significant difference on the
remaining expenses.

c. There is a significant difference

between the budgeting of married and
single minimum wage earners under of
rice, electricity and water bill, leisure
and recreation, and education expenses.
There is no significant difference on the
remaining expenses.

Recommendation
The researchers recommend the following based
from the conducted research:
1. Minimum wage earners must acquire Acknowledgement
sufficient awareness of the increasing prices of
commodities that particularly affect their budget in The researchers would like to acknowledge the
order for them to have a proper and suitable following people:
budgeting for their expenses. Also, they are
To Mr. Zandro Payocong, their thesis adviser, they
encouraged to supplement their knowledge about would like to express their sincere gratitude for his
train law since a benefit is granted to them. Such

Page 15
patience, guidance, supervision, and time that he
allotted to successfully conduct the research.

To the respondents, who honestly and actively

participated in answering the prepared questionnaires
to obtain a reliable data for our research.

To our parents, whose support and assistance is

continuous throughout the making of the study.

And foremost, our Almighty God who had given the

researchers the knowledge, strength and wisdom to
finish the research.

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Page 19
Page 20
Author Biographies
DWIGHT RYCHL R. CATABAY,
MARIEL ANNE C. AFICIAL, MARIAH
ALONDRA L. JOVERO, KIMBERLY C.
RIÑO AND KRISTEL JOY C.
Page 21
TERCEÑO, are fourth year Accountancy
Students of the School of Accountancy, Management,
Computing and Information Studies, Saint Louis
University, Baguio City, Philippines. MR. ZANDRO
W. PAYOCONG, CPA is their adviser in Accounting
403a, Management Consultancy I (Thesis).
Appendices:

Appendix A
QUESTIONNAIRE FOR MINIMUM WAGE EARNERS

Saint Louis University

School of Accountancy, Management, Computing and Information Studies
Maryheights Campus, Bakakeng, Baguio City

Good Day!

We, the students from Saint Louis University taking up Bachelor of Science in Accountancy are conducting a
research about the “Impact of the Tax Reform for Acceleration and Inclusion (TRAIN) Law to the Budgeting of the
Minimum Wage Earners in Baguio City.”

We sincerely ask for your participation in our research. Rest assured that all information will be held confidential
and will only be used for academic purposes. Thank you and God Bless!

Sincerely yours,

Catabay, Dwight Rychl R. Riño, Kimberly C.

Aficial, Mariel Anne C. Terceño, Kristel Joy C.

Jovero, Mariah Alondra L.

Noted by:

Mr. Zandro Payocong, CPA

Adviser
Name (optional):
Age: Sex: Civil Status:

Direction: Please choose the range which describes your monthly spending the most. If the following expenses
below are not within your budget, please leave it blank.

Legend: 1 – 250 and below 6 – 1251 – 1500

2 – 251 – 500 7 – 1501 – 1750
3 – 501 – 750 8 – 1751 – 2000
4 – 751 – 1000 9 – 2001 – 2250
5 – 1001 – 1250 10 – 2251 and above

BEFORE TRAIN LAW (Prior January 1, 2018)

Monthly Expenses 1 2 3 4 5 6 7 8 9 10
Food, Beverages and Tobacco
Rice
Meat
Fish
Fruits & Vegetables
Other food
Non-Alcoholic
Beverages (coffee,
juice, soft drinks etc.)
Alcoholic Beverages
Tobacco
Non Food
House Rent
Electricity and Water
Bill
Gas & Other Fuel
Clothing and
Footwear
Health and Medical
Services
Personal Care
Transportation
Communication
Leisure and
Recreation
Education
Savings
Savings
AFTER TRAIN LAW (January 1, 2018 to present)
Monthly Expenses 1 2 3 4 5 6 7 8 9 10
Food, Beverages and Tobacco
Rice
Meat
Fish
Fruits & Vegetables
Other food
Non-Alcoholic
Beverages (coffee,
juice, soft drinks etc.)
Alcoholic Beverages
Tobacco
Non Food
House Rent
Electricity and Water
Bill
Gas & Other Fuel
Clothing and Footwear
Health and Medical
Services
Personal Care
Transportation
Communication
Leisure and
Recreation
Education
Savings
Savings
 Appendix B
FREQUENCY DISTRIBUTION TABLE

Class Interval f CB CM <CF >CF %

17-22 25 16.5 - 22.5 19.5 25 100 25
23-28 31 22.5 - 28.5 25.5 56 75 31
29-34 18 28.5 - 34.5 31.5 74 44 18
35-40 13 34.5 - 40.5 37.5 87 26 13
41-46 8 40.5 - 46.5 43.5 95 13 8
47-52 3 46.5 - 52.5 49.5 98 5 3
53-58 1 52.5 - 58.5 55.5 99 2 1
59-64 1 59.5 - 64.5 62 100 1 1
100 100

Appendix C
 T –test for Sex and Civil Status

RICE
Male Female
3.255319
Mean 1 3.6415094
Variance 3.259482 4.4459361
Observations 47 53
3.889029
Pooled Variance 1
Hypothesized Mean
Difference 0
df 98
0.977389
t Stat 4
0.165391
P(T<=t) one-tail 5
1.660551
t Critical one-tail 2
P(T<=t) two-tail 0.330783
1.984467
t Critical two-tail 5

CIVIL STATUS
SINGLE MARRIED
Mean 2.8984375 4.3235294
Variance 2.7633309 4.2557932
Observations 64.0000000 34.0000000
Pooled Variance 3.2763648
Hypothesized Mean Difference 0.0000000
df 96.0000000
t Stat -3.7099082
P(T<=t) one-tail 0.0001737
t Critical one-tail 1.6608814
P(T<=t) two-tail 0.0003474
t Critical two-tail 1.9849843
 Appendix D
ONE WAY ANOVA FOR AGE

One-way ANOVA
Statistic
F 1.61
F, critical 2.111
Number of groups (e.g. columns) 8
p value 0.1423
Column means significantly different (p<0.05) ? No
Significance level: 95%

DEGREES
SUM OF MEAN
OF
ANOVA Table SQUARE SQUARE
FREEDO
S S
M
Source of variations
Between groups (e.g. between columns) 50.927 7 7.275
Within groups (Error) 415.663 92 4.518
Total 466.59 99
 Appendix E
IMPACT OF TRAIN LAW TO INDIVIDUAL EXPENSES

MONTHLY EXPENSES-MEAN
Food, Beverages and Tobacco
Before After Impact
Rice 3.2900 3.6300 0.3400 Above Average
Meat 2.8700 3.2000 0.3300 Above Average
Fish 2.6600 2.9300 0.2700 Average
Fruits &
2.5400 2.8200 0.2800
Vegetables Average
Other food
2.3200 2.3500 0.0300
expenses Very Low
Non-Alcoholic
Beverages
2.2400 2.3400 0.1000
(coffee, juice, soft
drinks etc.) Very Low
Alcoholic
0.7900 1.1500 0.3600
Beverages Above Average
Tobacco 0.6900 0.7600 0.0700 Very Low
Non Food
House Rent 3.7400 3.9300 0.1900 Below Average
Electricity and
3.0800 3.2100 0.1300
Water Bill Below Average
Gas & Other Fuel 2.6500 2.9000 0.2500 Average
Clothing and
2.2100 2.3900 0.1800
Footwear Below Average
Health and
1.9700 2.3500 0.3800
Medical Services Above Average
Personal Care 2.4200 2.6700 0.2500 Average
Transportation 2.5800 3.0600 0.4800 Very High
Communication 2.0700 2.2800 0.2100 Average
Leisure and
1.6600 1.6700 0.0100
Recreation Very Low
Education 2.7100 3.0100 0.3000 Above Average
Savings
Savings 2.0700 1.7600 0.3100 Above Average