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

 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.
 We,
the researchers,
gratefully dedicate this study to our professors,
friends, family
and
to
GOD Almighty

MR.T.C
K.L.C
JM.B.M
K.M.M
K.B.P
KM.H.P
EM.G.V
 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,
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
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.
 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 LITERATURE

Nature 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

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
 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

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

10 Distribution of Respondents according to their View on why

 Household Leisure is Limited 37

11 Post-purchase of Leisure 38
 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
 CHAPTER I

INTRODUCTION
 CHAPTER II

REVIEW OF
RELATED LITERATURE
 CHAPTER III

METHODOLOGY
 CHAPTER IV

PRESENTATION AND
ANALYSIS OF DATA
 CHAPTER V

SUMMARY,
CONCLUSION, AND
RECOMMENDATION
APPENDICES
 APPENDIX A
SAMPLE SURVEY FORM

Pontifical and Royal

UNIVERSITY OF SANTO TOMAS
España, Manila
Alfredo M. Velayo - College of Accountancy

“A RESEARCH ON THE HOUSEHOLD LEISURE CONSUMPTION PATTERN OF

BREADWINNERS WITHIN METRO MANILA UNDER THE BURDEN OF VALUE-
ADDED TAX”

This survey aims to identify the effects of VAT to the Household Leisure Consumption of
breadwinners in Manila. The results shall help resolve the issues brought by this action.

Respondent’s Profile:
Name (Optional): Occupation: [ ] In Business
Age: [ ] (18-28) [ ] Employed
[ ] (29-39) [ ] Working Student
[ ] (40 above) [ ] Professional Student
Gender: [ ] Male [ ] Female [ ] Others
Civil Status: [ ] Single Pls. Specify
[ ] Married
[ ] Widow/er Income Bracket:
No. of family members: [ ] P 1,000 – P 10,000
Educational Attainment: [ ] P 10,000 – P 20,000
[ ] Professional [ ] P 20,000 – P 30, 000
[ ] College Graduate [ ] P 30,000 – P 40,000
[ ] College Undergraduate [ ] Others ____________

[ ] High school Graduate

[ ] High school Undergraduate
[ ] Others, Pls. Specify

Direction: Kindly put a check on the space provided for your answer.
1. How often do you usually buy things for leisure?
[ ] Always
[ ] Sometimes
[ ] Never
[ ] Others, Pls. Specify
2. Does your monthly income gives you allowance for commodities other than
basic needs?
[ ] Yes [ ] No
 If Yes, what kind of Household – Leisure products do you usually acquire?
[ ] Shopping [ ] Buying Appliances
[ ]DVD’s
[ ] 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

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. Specify
8. 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 Not
Sure
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 O
Going out for the evening for O O O O O
drinks and entertainment (ex
Mall, Bars)
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 O
Attending opera, valet, or dance O O O O O
performances
Buying new appliances O O O O O
Watching Television/Using the O O O O O
computer

(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 is
limited?

[ ] Basic necessities first (consumption goods, education, etc.)

[ ] Not included in the budget/No Financial Capacity
[ ] You don’t naturally spend on it
[ ] I don’t know

Post-purchase:
[ ] Additional utility bills for consumption of such leisure
[ ] High maintenance cost
[ ] I might not help but spend on it
 APPENDIX B

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.
 APPENDIX C

Figure 3.2.2

Distribution of Respondents according to their

View on what grounds they think Government
base VAT

40
30
20
10
q
n
u
y
cF
re

0
Choice 1 Choice 2 Choice 3 Others

Choices

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.
 BIBLIOGRAPHY

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website: http://www.heritage.org/research/taxes/bg1852.cfm

Mullet, S. (1988). Leisure and consumption: incompatible concepts. Routledge

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December 18, 2008, from Conferenz website: http://www.conferenz.co.nz/efficiency-
and-effectiveness-in-the-public-sector-2.html

Newhouse, D. & Zakharova, D. (2007). Distributional Implications of the VAT Reform

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