Revised D Chap 1

PATEROS CATHOLIC SCHOOL
Senior High School Department

Pateros, Metro Manila
ACCOUNTANCY AND BUSINESS MANAGEMENT
Perceived Effects of TRAIN Law on the Profitability of Food Businesses in the

Philippines
12-St. Peter Fabre
Group
Castro, Paolo
Gomez, John Carlo
Pedro, Menard
Asuncion, Jill
Chua, Princess
Grajo, Ann
Pagbunucan, Trishia
Perceived Effects of TRAIN Law on the Profitability of Food Businesses in the Philippines
Asuncion, J., et al. (2019) 1
CHAPTER 1:
THE PROBLEM AND ITS BACKGROUND
Background of the Study:
Last December 19, 2017 The Tax reform for Acceleration and inclusion TRAIN)
Act, officially sited as Republic Act No. 10963 was implemented by President Rodrigo
“Roa” Duterte. The objective of this law is to uphold more effective system of tax
collection and to lower the rate of poverty in the Philippines. The implementation of
TRAIN resulted to the decreasing amount of tax payable to minimum wage earners and
the increasing cost of tobacco products, petroleum products, automobiles, tobacco, and
additional excise tax on sweetened beverages and non-essential, invasive cosmetic
procedures were introduced. One of the aspect that is affected by train law are food
businesses because of the increase on the price of petroleum products such as LPG,
Diesel, and Kerosene which does not only affect transportation fares but also the cost of
food.
Since when the Tax Reform for Acceleration and Inflation was passed by the
Senate, the consumer price starts to increase rapidly. Just like train that comes fast, the
inflation was immediately felt by Filipinos. According to DOF, it was estimated that the
TRAIN law was expected to increase inflation and its maximum effect was to add 0.9
percent to base inflation for 2018 (based on the DOF presentation, August 2017). Thus,
TRAIN law is now connected to inflation since its objective is to add excise tax to
selected products that causes the inflation. Moreover, this also results to the decreasing
amount of Peso and cutting of more tax from the earners.
Inflation is a major concern to global economist, and it affects people from all
walks of life (Fletcher C., 2019). Inflation is the rate at which cost of goods and services
rises over time (Uzialko A., 2018). Inflation rate affect the businesses when prices rise for
raw materials, energy and commodities businesses will be forced to raise their prices for
their goods and services. As prices increase, monetary value decreases prompting
consumers to spend less on goods and services.
Hence, Inflation does not only give an impact to large scale businesses, but also in
small enterprises. Small scale business are marked by a limited number of employees and
a limited flow of finances and materials which is also affected by the inflation (Sarokin
D.,2019 ).
Small scale businesses such as food establishments plays an important role to the
development of the economic growth of a country. According to the Department of Trade
and Industry, as of 2017 the number of Accommodation and Food Service Activities were
121,740 business establishments which is 13.22% of 99.56% of the Micro, small
and medium enterprises (MSMEs) Statistical data in the Philippines. Thus, Small
businesses such as food establishments are highly preferred by business owners to
manage because of its ability to be totally immersed in the business and its flexibility to
operate.
Thus, the researchers’ objective is to seek the effects of TRAIN in a food
business. The group of researchers will have cross-sectional surveys to the managers and
business owners to know more about the effects of inflation when it comes to their
business profitability, operational cost, pricing etc.
Research Problem and Questions:
The core objective of this study is to explore the effects of TRAIN on small scale
food businesses.
Specifically, it will attempt to answer the following questions:
1. How does TRAIN affects a food business?
2. What are the different aspects being affected?
3. How do food businesses cope up with rising prices of good?
4. What are the effects of TRAIN to the sales performance of stores before and
after its implementation?
5. What are the store owner’s perceptions towards TRAIN Law?
Conceptual Framework:
TRAIN LAW
SALES EXPENSES
FOOD BUSINESS
PROFITABILITY
Figure 1.1
Conceptual Framework of Research
Conceptual Framework Explanation
The figure shows the conceptual framework of the study. The researchers decided
to study TRAIN. Cutting the purchasing power of income of a small-scale business can
affect the standard of living of the people while increasing the daily expenses of it. The
cost of living of a consumer depends on the prices of goods and services that a small-
scale business offers. The entire economy is affected when prices for energy, food,
commodities, and other goods and services rises. This study aims to know the effect of
TRAIN to small business and how the changes in price ceiling affect the expenses and
sales of a business.
Hypothesis:
Inflation has a negative effect on

economic growth.
economic growth.
economic growth.
economic growth.
economic growth.

economic growth.
The implementation of TRAIN has a direct impact on the economy of a food business.
Aspects which determine the overall performance of a business such as expense, pricing
and profitability are greatly being affected by TRAIN. Business owners have different
coping mechanisms against the implementation of this law.
Significance of the Study:
This research has a purpose of studying the effects of the newly amended Tax Reform for
Acceleration and Inclusion (TRAIN) Law in the Philippines to the sales performance of
food establishments near or in the Municipality of Pateros. This study is beneficial to the
following:
CONSUMERS- This study can be helpful to consumers to know the status of the present
rise and fall of prices specially the commodities of the people. In order to know and study
the effects of it and the expected increase of expense of the products and services.
BUSINESS STUDENTS- This study can help them analyze the chronological progress
of the present and past consumer price index on the inflation and the expected theories
that will come in the future event. The percentage and the anticipated growth of inflation,
it also explains the movement and the adaptation of businesses according to unavoidably
events. It also serves as a reference and research study.
BUSINESS OWNERS AND MANAGERS- This study may provide information that
can help small scale business realize how inflation can affect them and how it will affect
their sales, expense, and destroy the balance in their budget analysis. This study may
serve as their guideline and reference that provides information and data about the
changes in economic growth over time. Specifically, on how the cause and effect of
inflation reconstruct the current changes to maintain the equilibrium in price ceiling and
supply and demand.
RESEARCHERS- This study serves as great part for the completion of the researchers’
course requirement. This gave a lot of challenges such as meeting new faces and also in
being aware to the actual situation. This developed their self-esteem and has been an
example of leadership in interacting with others, increased their vocabulary and kept their
determination to finish what they have already started. This also led them to discover new
knowledge and widened their horizon.
FUTURE RESEARCHERS- This can be an effective tool and reference for the
researchers who would intend to make any further relevant study. They may find this
study valuable because it includes thorough study, statistical analysis, and accurate and
precise data gathering throughout the whole research, and it provides information about
sales, expense, marketing strategies, and budget analysis.
Scope and Limitations:
The purpose of this study is to determine the different effects of TRAIN in the
economic growth of a food establishment. Specifically, this study focuses on small-scale
food establishments located in Pateros for such reason that it has the most convenient
respondents and knowing that Pateros has numerous small-scale food establishments.
Small scale business is independently owned and operated, it has capital contribution
from limited number of individuals and operates in a local area. This study aims to know
the effects of TRAIN to the a business and to compare the quantities of before and after
it’s implementation.
The researchers used the Questionnaire Method as a tool for gathering and
collecting data. The target respondents of this study are the respective owner or managers
of the food establishments such as bakeries, coffee shops, milk tea houses and others that
were selected. The sampling design that is used in this study is judgmental and
convenience sampling.
Definition of Terms:
1. Capital-Capital is a term for financial assets, such as funds held in deposit

accounts, as well as for the physical factors of production; that is, manufacturing
equipment. (Investopedia)
2. Inflation – It is the rate at which the cost of goods and services rises over time.
(Business News Daily, Uzialko A.,2018)
3. Inflation Rate-Inflation is the rate in which the general level of prices of goods
and services increase. (GMA News, 2018)In this study, it is the increase in the
prices of goods due to the tax levied to it.
4. Smale Scale Enterprise -A small scale enterprise, or more simply, a small

business, is one marked by a limited number of employees and a limited flow of
finances and materials.(Small Business Chron , Sarokin D.,2019)
5. TRAIN - Is the reduction in personal income tax, leading to higher take-home

pay. (Coins.ph, 2018) In this study, TRAIN Law is the one who is responsible for
the inflation rate.
Ethical Issues/ Considerations:
Voluntary participation of respondents
Some of the respondents are afraid or shy to participate in the conduct of this study.
Voluntary participation of respondents in conducting this research is important.
Moreover, participants are given the freedom to withdraw from the study at any stage if
they wish to do so.
Informed consent
The principle of informed consent involves researchers providing sufficient information

and assurances about taking part to allow individuals to understand the implications of
participation and to reach a fully informed, considered and freely given decision about
whether or not to do so, without the exercise of any pressure or coercion. The principle of
informed consent involves researchers providing sufficient information and assurances
about taking part to allow individuals to understand the implications of participation and
to reach a fully informed, considered and freely given decision about whether or not to do
so, without the exercise of any pressure or coercion. The researchers will formally inform
the respondents about the surveys that will distributed to them, and also to provide a
specific schedule on the day that the respondent is schedule free and ready to answer the
questions provided. The respondents are given enough time to think and answer each
question to them. For every questions is essential because it is needed to fill the data that
is needed for the study..
Confidentiality
All of the results and information given by the respondents will stay in between them and
the researchers to avoid conflict and to respect the respondent's privacy. The information
gathered from the respondents will be used as research purposes only and promised to be
respected. Other information gathered from the respondents that is beyond the topic will
not be included to the research paper.
Respect for intellectual property
Not all facts or information that can be read in the paper came from the researchers.
Therefore, researchers used proper citations to acknowledge the person behind those
works who are included in the research paper
Carefulness and Openness
Lastly, all results that will be presented are based on the data gathered to ensure the
legality and accurateness of the output.

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PATEROS CATHOLIC SCHOOL

Senior High School Department

Perceived Effects of TRAIN Law on the Profitability of Food Businesses in the

12-St. Peter Fabre

THE PROBLEM AND ITS BACKGROUND

Background of the Study:

additional excise tax on sweetened beverages and non-essential, invasive cosmetic

amount of Peso and cutting of more tax from the earners.

consumers to spend less on goods and services.

development of the economic growth of a country. According to the Department of Trade

121,740 business establishments which is 13.22% of 99.56% of the Micro, small

businesses such as food establishments are highly preferred by business owners to

Thus, the researchers’ objective is to seek the effects of TRAIN in a food

business profitability, operational cost, pricing etc.

Research Problem and Questions:

Specifically, it will attempt to answer the following questions:

1. How does TRAIN affects a food business?

2. What are the different aspects being affected?

3. How do food businesses cope up with rising prices of good?

5. What are the store owner’s perceptions towards TRAIN Law?

Conceptual Framework Explanation

Inflation has a negative effect on

Inflation has a negative effect on

Significance of the Study:

Scope and Limitations:

1. Capital-Capital is a term for financial assets, such as funds held in deposit

4. Smale Scale Enterprise -A small scale enterprise, or more simply, a small

5. TRAIN - Is the reduction in personal income tax, leading to higher take-home

Ethical Issues/ Considerations:

Voluntary participation of respondents

The principle of informed consent involves researchers providing sufficient information

Respect for intellectual property

Carefulness and Openness

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