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A RESEARCH ON THE HOUSEHOLD PASSIVE LEISURE CONSUMPTION

PATTERN OF BREADWINNERS WITHIN METRO MANILA UNDER THE

BURDEN OF VALUE ADDED TAX

Presented to

Ms. Ma. Ailil B. Alvarez

Alfredo M. Velayo College of Accountancy

University of Santo Tomas

In Partial Fulfillment

of the requirements for

English 108 (Technical Writing)

Prepared by

Carlos, Marco Roberto T.

Cruzada, Kristine L.

Maminta, Juan Marlo B.

Monfort, Kareen M.

Palo, Keren B.

Palomillo, Kris Marielle H.

Valdez, Enica May G.

Feb/March __, 2009


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Acknowledgement

The researchers gratefully acknowledge the following faculty members for

imparting their knowledge and for the advises they have given: Ms. Ma. Ailil B.

Alvarez, for her advises since we started up to the time we finalizes our research;

Ms. Ginavee Dapula, for her comments and suggestions in constructing our

research topic and thesis statement that serve as the primary guide all through out

this topic.

The researchers would also like to thank their parents, professors, and

classmates who served as their inspiration through the whole process of the

research and their friends for helping them in handing out survey forms to those who

they know.

The researchers also appreciate all those seventy respondents who were

cooperative during our survey, as well as the library personnel of University of Santo

Tomas Central Library and to Mr. and Mrs. Palomillo (Bureau of Internal Revenue

employees) who guided us in the process of collecting our related literature.

This research is given back to the Greatest Researcher, Greatest Adviser and

the Greatest Panelist.


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ABSTRACT

This research studies how the Value Added Tax in the Philippines affects the

Household Leisure Consumption pattern of breadwinners in Metro Manila. This was

made to deliver information and awareness to readers.

As basis for data and information, this study involved survey forms as the

primary means of data collection. Seventy respondents participated in the said

study. Respondents considered by the researchers were breadwinners in Metro

Manila area who are monthly income earners of not more than Forty Thousand

Pesos. Responses were presented and analyzed. The type of leisure discussed by

the researchers was the passive leisure activities.

Findings of the study include the following: a) VAT imposed on commodities

implies higher prices hence it alters the consumption pattern of households b) With

VAT, consumers particularly the breadwinners tend to limit their spending on leisure

products/activities whether such is taxable or not prioritizing basic necessities. The

generated responses from the participants conform to the expected outcome of the

researchers.

The following data are collected: As for the profile of the respondents,

majority of the respondents are within eighteen to twenty-eight years old (47%),

there are more male respondents (64%) than female (36%). Majority are single

(57%) followed by those who are married (43%). They are currently employed (66%)

earning Ten Thousand to Thirty Thousand Pesos (68%) and usually support one to

five family members (52%). A greater part of the respondents are College

Graduates.

The answers to the questions stated in Chapter 1 were gathered from the

responses of the participants. The response for problem 1, which is how many of the

respondents favor the implementation of Value-Added Tax on consumption goods,


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respondents who oppose (67%) VAT outnumbered those who are undecided (17%)

and who responded positively (16%). Their main reason of being against VAT is that

it resulted to expensive goods and commodities while those who support VAT

believe that the said tax would support the expenses of the government for new

projects which would be enjoyed by the citizens. The response for Problem 2, which

is how many of the respondents think that the implementation of VAT affects their

household leisure consumption, is majority of the respondents believe that the said

tax affects household leisure consumption. It lessens or limits their financial capacity

of acquiring leisure products while some of them no longer spend on it at all. The

response for Problem 3, which is, how many of the respondents are still capable of

acquiring commodities other than basic needs, is that from the monthly income

received by the respondents, majority are still capable of spending on leisure (54%).

A very close amount responded that they are no longer capable of spending on

leisure. Such products and activities they usually buy and perform are going to the

mall, watching movies, vices, new home appliances, and books for entertainment.

The response for Problem 4, which is how many of the participants spend large

amount of money in acquiring leisure, is that most of the respondents do not

consume large amount of money for leisure consumption (59%). Most of them spent

1,500Php to 2,000 for leisure goods and services. The response for Problem 5,which is what the frequency of their consumption of leisure is, is that majority of the

respondents said that they never engaged in attending opera, ballet, or dance

performances in the past three months. The least number of respondents said that

they frequently engaged in playing adult games, buying books for pleasure, and

visiting art galleries and museums. These activities were part of the leisure activities

cited by the researchers. The breadwinners believe that leisure consumption is

limited because they prioritize consumption of basic necessities and buying leisure

only after satisfying their basic needs. They also consider the after-purchase cost of

leisure such us additional utility bills and maintenance cost.

People are not blinded by the fact that prices of goods and services are not

stable and continuously increasing. The added burden of VAT makes it harder for


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households to spend not only on leisure but also the basic necessities. Of course,

families would have to prioritize their consumption of their needs before spending on

their wants. But with the additional money they have to spend because of VAT,

households tend to limit their leisure consumption further. Some of them no longer

spend on it at all especially when they are supporting more than two family

members. From that findings, the researchers concluded that like what Schenk &

Oldman (2007, p 34) stated, the VAT will not interfere with patterns of consumption

(that is, how consumers decide to divide their purchases among available choices),

except for the choice between untaxed consumption and untaxed consumption. Still,

Value-Added Tax alters the Leisure Consumption Decision of Households. Although

the purpose of implementing Value-Added tax is to generate additional revenues to

fund Government projects such as infrastructure, educational, medical, housing, and

other programs, the said tax is undeniably an additional financial burden to middle

class families whenever they want to enjoy even a little amount of luxury in life.


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TABLE OF CONTENTS

Title i

Acknowledgement ii

Dedication iii

Abstract iv

Table of Contents vii

List of Figures ix

List of Table xii

Chapter 1 INTRODUCTION

A. Background of the Study 1

B. Statement of the Problem 3

C. Significance of the Study 4

D. Scope and Limitation 5

E. Definition of Terms 6

Chapter 2 REVIEW OF RELATED LITERATURENature and Effects of Value-Added Tax 8

Distributional Implications of the VAT Reform 9

Regressivity versus Progressivity of VAT 10

The Economics of VAT 11

Nature of Leisure 12

Consumerism 13

Chapter 3 RESEARCH METHODOLOGY 14

Chapter 4 PRESENTATION AND ANALYSIS OF DATA 17


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Chapter 5 SUMMARY, CONCLUSION, AND RECOMMENDATION

A. Summary and Conclusion 39

B. Recommendation 41

APPENDIX A xiii

APPENDIX B xvii

APPENDIX C xviii

BIBLIOGRAPHY xix


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LIST OF FIGURES

Pages

Figure 1 Distribution of Respondents according to Age 17

1.1 Distribution of Respondents according to Gender 18

1.2 Distribution of Respondents according to Civil Status 18

1.3 Distribution of Respondents according to

Number Family Members 19

1.4 Distribution of Respondents according to Occupation 20

1.5 Distribution of Respondents according to Educational Attainment 21

1.6 Distribution of Respondents according to Monthly Income Bracket 21

2 Distribution of Respondents according to their View

concerning the implementation of Value Added Tax 22

2.1 Distribution of the possible reasons why respondents favor VAT 23

2.2 Distribution of the possible reasons why they oppose VAT 24

3 Distribution of Respondents according to their View

concerning the Equitability of Value Added Tax among

Filipino Families 25

3.1 Distribution of the possible reasons why they think VAT is just 26


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3.2 Distribution of the possible reasons why they think VAT is

not just 27

3.2.1 Distribution of Respondents according to their View whether

the Implementation of VAT can resolve the Economic

Crisis of the Philippines Appendix B

3.2.2 Distribution of Respondents according to their View on what

grounds they think the Government base VAT Appendix C

4 Distribution of Respondents according to their View concerning

the Effect of VAT their Household Leisure Consumption 28

5 Distribution of Respondents according to their View concerning

the Effects of Household Leisure Consumption under the Tax

Burden of VAT 29

6 Distribution of Respondents according to the Availability of

Allowance in Spending on Leisure 30

7 Types of Leisure Products they acquire 31

8 Distribution of Respondents according to the Degree of their

Leisure Consumption 32

9 Distribution of Respondents whether they spend large amount

of money in Acquiring Products for Household Leisure

Consumption 33

9.1 Amount of money spent for leisure 34


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10 Distribution of Respondents according to their View on why

Household Leisure is Limited 37

11 Post-purchase of Leisure 38


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LIST OF TABLE

Page

Table 1 Percentage Distribution of Respondents on the Frequency with

which they Engage in the following Activities in the past three

months 35


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CHAPTER I

INTRODUCTION


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CHAPTER III

METHODOLOGY


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CHAPTER IV

PRESENTATION AND

ANALYSIS OF DATA


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CHAPTER V

SUMMARY,

CONCLUSION, AND

RECOMMENDATION


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APPENDICES


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If Yes, what kind of Household Leisure products do you usually acquire?

[ ] Shopping [ ] Buying Appliances [ ]DVDs[ ] Gadgets [ ] Vices (Cigarettes/ Alcohol) [ ] Foods

[ ] Books [ ] Others

3. Do you spend large amount of money in acquiring products for Household

Leisure consumption?

[ ] Yes[ ] No

If Yes, on which price brackets does this product falls?

[ ] P 500 P 1000[ ] P 1000 P 1500

[ ] P 1500 P 2000

[ ] P 2000 above

4. Are you in favor of the tax laws imposing 12% VAT on commodities?[ ] Yes

[ ] No[ ] Undecided

If Yes, why?

[ ] Increase in government funds for new projects[ ] Support the citizens

[ ] Payment of debt

[ ] Others: ______________________________

If No, why?

[ ] Expensive Goods[ ] Government Corruption

[ ] Additional Burden

[ ] Very High Rate[ ] Others: ______________________________

5. Among Filipino families, do you think VAT is just?

[ ] Yes[ ] No

[ ] Undecided

If Yes, why?

[ ] All are paying [ ] Used properly [ ] Improving economy

If No, why?[ ] Additional burden [ ] Affects basic needs

[ ] Too high expenses [ ] Corruption

[ ] Affects low income earners more


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6. Do you think the implementation of VAT will help resolve the economic crisis of

the Philippines?

[ ] Yes[ ] No

7. On what grounds do you think the government base VAT?

[ ] To defray necessary expenses of the government.[ ] To promote general welfare and protection of the citizens.

[ ] Personal gains/benefits.

[ ] Others, Pls. Specify8. Does the implementation of VAT affects your consumption in Household

Leisure commodities?

[ ] Yes

[ ] No

If Yes, in what way?

9. What effects on the consumption of Household Leisure do you encounter

under the tax burden of VAT? (you may have more than one answer)[ ] Less buying of commodities for leisure.

[ ] Buying more commodities for leisure.[ ] Less buying of basic necessities.

[ ] Buying more of basic necessities.

[ ] Buying such products only after satisfying basic needs.

[ ] Not buying at all.[ ] Others, Pls. Specify

10. Please check the frequency in which you engaged in the following activities in the

past 3 months. Check only one answer for each possible leisure activity.

Leisure Activity Frequently Occasionally Seldom Never NotSure

Playing adult games (ex. Casino) O O O O O

Buying books for pleasure O O O O O

Going on a family outing O O O O OGoing out for the evening for

drinks and entertainment (ex

Mall, Bars)

O O O O O

Going to the movies O O O O O

Visiting art galleries and museums O O O O O

Collecting or Making something O O O O OAttending opera, valet, or dance

performances

O O O O O

Buying new appliances O O O O O

Watching Television/Using thecomputer

O O O O O


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(If your answers range from seldom to not sure, proceed to No. 11)

11. What do you think are the reasons why your household leisure consumption islimited?

[ ] Basic necessities first (consumption goods, education, etc.)[ ] Not included in the budget/No Financial Capacity

[ ] You dont naturally spend on it

[ ] I dont know

Post-purchase:

[ ] Additional utility bills for consumption of such leisure

[ ] High maintenance cost[ ] I might not help but spend on it

APPENDIX B


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Figure 3.2.1

The above figure shows that majority of the respondents believe that VAT will

not resolve the economic crisis of the Philippines.


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APPENDIX C

Figure 3.2.2

0

10

20

30

40

Choice 1 Choice 2 Choice 3 Others

Frequency

Choices

Distribution of Respondents according to theirView on what grounds they think Government

base VAT

The above chart shows that choice 3, which is personal gains/benefits, got

the most number of respondents (49%). Next in order are choice 1 (31%), which is

to defray the necessary expenses of the government, and choice 2 (18%), which is

to promote general welfare and protection of the citizens, respectively. 2% cited

other reasons.


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De Souza, R., (n. d.). John Paul II and the Problem of Consumerism. Retrieved

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Galbraith, J. (1984). The Affluent Society 238 (4th ed.). Houghton Mifflin Co.

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Jenkins, G., Jenkins, H., & Kuo, C. (2006). Is the Value-Added Tax Naturally

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