Background of the Study


The Value-Added tax is an indirect tax levied on goods and services as they transfer from one production process to the other. The most common form to impose VAT is the “credit-invoice VAT” which operates like sales tax (Mitchell, 2005). Since it is a sales tax and an indirect tax, the tax liability of producers can be passed on to consumers at a specific rate which is now 12%. This is measured by the price paid for the goods purchased multiplied by the uniform rate. As cited by Newhouse and Zakrahova (2007, p. 3), government revenue was estimated to increase by about 1.3 percentage points of GDP on 2006 because the VAT rate was increased from 10% to 12% on February 2006. As a result, prices of goods and services increased, including electricity and petroleum products. The Value-Added Tax will not interfere with how consumers will distribute their purchases among goods for the choice between untaxed consumption such as leisure and taxed consumption (Schenk & Oldman, 2007). Since they exclude only products and services which are too difficult to purchase, consumers tend not to spend on those things and focus more on something important such as basic necessities. Unfortunately, these necessities impose increasing prices and, at the same time, untaxed good are worth more which gives the former much attention over the latter. In the eyes of the lawmakers and the government, the said tax is a source of wealth and creates a good opportunity for a state to progress. However, behind its attractive attributes is an additional burden to consumers which are often ignored. Historically, a VAT has been considered as a possible way to raise government revenue and to meet their public expenditures. In spite of the opportunities it offers, not all people are proponents of the said tax. Some favors VAT while some do not. Others support its implementation because they believe that



it could further develop a nation and promote long-term economic growth. On the contrary, others oppose VAT for a number of reasons. One of which is that it is thought to be regressive since people with lower income consume a higher proportion of their income than those at the top of the income distribution (Hammond & Raboy,1995). Hence, the tax burden of those with lower income increases. Since consumption goods are affected by VAT, most people limit their consumption on untaxed goods which include leisure. Other people do not include in their budgets the consumption of the things they want because their monthly income is allocated for basic necessities which include foods and other expenses such as transportation and daily allowance. What has been the effect of Value-Added Tax on Household Leisure Consumption Pattern of breadwinners? In line with the growing issues against VAT, this study was conducted to find out the relation of VAT on household leisure consumption of people particularly on breadwinners who usually belong on the income bracket of not more than Forty Thousand Pesos. Also, the researchers aim to determine how VAT distorts consumer’s spending decisions. In addition, the research was carried on to be informed on their reactions on VAT whereas the prices of basic commodities are continuously increasing.

CHAPTER 1: INTRODUCTION B. Statement of the Problem


The researchers seek to determine how VAT affects the household leisure consumption of the breadwinners who are currently residing in Metro Manila whose income bracket does not exceed Forty Thousand Pesos. Additional expenditures such as the VAT are burdensome for them considering that usually, the salary they receive is just enough for their daily needs. This fact led the researchers to find the answers to the following questions: 1. How many of the respondents favor the implementation of Value-Added Tax on consumption goods? 2. How many of the respondents think that the implementation of VAT affects their household leisure consumption? 3. How many of the respondents are still capable of acquiring commodities other than basic needs? 4. Do breadwinners spend large amount of money in acquiring leisure? 5. What is the frequency of their consumption of leisure?

CHAPTER 1: INTRODUCTION C. Significance of the Study


The researchers hope that the findings of this study will help readers to be aware on how the Value-Added Tax affects, more or less, the consumption patterns of consumers on hard-to-reach goods and services. It was also conducted in the light of helping households to share their sentiments regarding the effect of VAT on their consumption of leisure.

CHAPTER 1: INTRODUCTION D. Scope and Limitation


This study dealt with the effects of Value-Added Tax on employees with a net income bracket of not over Forty Thousand Pesos, particularly the breadwinners of the family residing in the Metro Manila area on their Household Leisure Consumption. This was not made to deliver a comprehensive analysis about VAT, nor was it meant to scrutinize its implementation. However, as additional information, the researchers asked the respondents whether they are proponents or opponents of the said VAT. This was conducted just to determine the household leisure consumption patterns of the participants to fit with the salaries they receive. The type of leisure considered by the researchers was the passive leisure activities. The researchers limited themselves to the feedback of the respondents and some relevant sources. This research examines the relationship which exists between Value Added Tax and Household Leisure Consumption and how it affects the leisure consumption pattern of the said respondents.

CHAPTER 1: INTRODUCTION E. Definition of Terms Breadwinner


They are the one whose earnings are the primary sources of

support for one’s dependents (“Breadwinner,” 2004, p. 109). Credit-Invoice VAT It is typically administered by taking the total value of

sales of all businesses (Mitchell, 2005). Capitalism It is an economic system in which the means of production and and development is

distribution are privately or corporately owned market (“Capitalism,” 2004, p. 132). Consumerism

proportionate to the accumulation and reinvestment of profits gained in a free

According to De Souza (n.d.), Consumerism arises when the

person becomes, in his own mind or in the view of others, primarily an object that consumes solely for himself, rather than a subject who uses material goods in order to give himself to others. Indirect tax As what Schenk and Oldman (2007) noted, Indirect tax is a tax

levied upon commodities before they reach the consumers who ultimately pay[s] the taxes as part of the market price of the commodity. Levy It deals with the provisions of law which determines the person or property to be taxed, the sum or sums to be raised, the rate thereof, and the time and manner of levying, receiving and collecting the taxes (Ampongan, 2008). Market forces These are the economic factors that affect the price and

availability of a commodity or product in a free market (Martin, n.d).



It refers to activities in which a person does not exert any

significant physical or mental energy, such as going to the cinema, watching television, or gambling on slot machines (“Passive Leisure,” n.d.). Private sector It is a part of the economy which is both run for private profit and

which is not controlled by the state (Johnson, n.d.). Progressive rate It is a rate which increases as the tax base or bracket increases

(Ampongan, 2008). Public sector It refers to a part of economic and administrative life that deals

with the delivery of goods and services by and for the government, whether national, regional or local/municipal (Murphy, 2007). Regressive rate Is is a rate of which decreases as the tax base increases

(Ampongan, 2008). Value-added tax 2008). It is a tax on consumption levied on the sale of goods and

services and on the imports of goods into the Philippines (“Value-Added Tax,”



The purpose of this study is to present information regarding the Household Leisure Consumption of consumers specifically, breadwinners whose incomes are not over Forty Thousand Pesos under the burden of Value-Added Tax on. This chapter presents the review of related research of the relationship of VAT imposed on goods and services and household leisure consumption. The literature about the nature and effects of VAT, distributional implications of the VAT reform, regressivity versus progressivity of VAT, its economics and politics, the nature of leisure and consumerism are discussed.

Nature and Effects of Value-Added Tax Meaning of Value-Added Tax Schenk & Oldman (2007, p. 1) defined the Value-Added Tax as “intended to tax personal consumption comprehensively, neutrally, and efficiently”. It has been the most common tax reform in the world and is widely used in both developed and developing countries. Income and Consumption Base for Tax The said authors cited above added that “consumption-based taxes imposed on transactions (like the VAT) cannot be tailored to individual circumstances”. One complaint about the said VAT is its regressivity. A response from this argument came from economist John Kenneth Galbraith (1984) “the obvious solution is by making private goods more expensive, public goods are made more abundant. Motion pictures, electronic entertainment, and cigarettes are made more costly so that schools can be more handsomely supported. We pay more for soap, detergents and vacuum cleaners in order that we may have cleaner cities and lesser occasion to use them. We have more expensive cars and gasoline so that we may have more agreeable highways and streets on which to drive them. Food being relatively cheap, we tax it in order to have better medical services and better health in which to enjoy it”.



Effects of VAT Mitchell (2005) cited in his research paper several adverse effects of VAT. First, it will expand the cost of government since countries with VATs have heavier tax burden compared to those without VATs. Second, it will increase income tax rates. Mitchell further explained that “in the real world, the VAT has been used as an excuse to increase income taxes as a way to maintain “distributional neutrality.” Third, it will slow economic growth and destroy jobs for two reasons—it reduces incentives to be more productive and it diminishes economic efficiency since it allows transfer of resources from private to public sector of the economy.

Distributional Implications of the VAT Reform As stated by Newhouse & Zakharova (2007), Value Added Tax is designed to raise revenue of the government for its expenditures. It is distributed in a proportionate burden, meaning, authorities tax sales in accordance with the transactions incurred. In practice, many countries, because of political pressures to use the tax system to correct social inequities and because of their inability to tax certain sector, use exemptions and multiple rates that consume the neutrality of the VAT. Such complications make the VAT more complex and expensive to administer and increase the opportunities for evasion. According to the study made by said authors (2007, p. 6), VAT reform had a moderate adverse effect on poor households, and was progressive in its overall distributional impact. VAT is computed by subtracting inputs from outputs but it is not actually a requirement that the trader will subtract these two instead, traders tax every sale and purchase and nets out the difference in tax liabilities for each trader. In this way, a trader charges a proportional tax rate on all sales.

CHAPTER 2: REVIEW OF RELATED LITERATURE Regressivity versus Progressivity of VAT


The VAT is a sales tax applied to the sales of goods and services at all stages of the production and distribution chain. By using a credit invoice method, vendors are able to claim tax credits to gain the tax they paid on their business. As a result, the tax is in effect applied only to the value added of each vendor. The only tax that does not get credited or refunded is the tax imposed on the final consumption purchased by individuals and governments. Hence, the tax is theoretically equivalent to the retail sales tax on final consumption (Jenkins, 2006). The proposition that the VAT is regressive is based on the observation that the VAT is a tax on consumption, and the poor tend to consume a larger proportion of their incomes than do the higher income groups. For this reason, the VAT must be regressive because the poor has paid more tax as a percentage of their income. For this result to come about, four conditions must hold: first, the savings of the higher income groups today will not be consumed by these people on taxable goods and services in the future; second, all goods subject to VAT are taxed equally; third, the poor spend the same proportion of their total expenditures on taxable consumption goods as do higher income families; and a 100% of the consumption taxes are passed through to final consumers (Jenkins, 2006). The counter arguments as the follows: First, most of the savings undertaken today will be used to pay for consumption in the future when the people either retire or suffer a temporary loss of income. These future expenditures will be subject to the VAT; hence, it is not correct to say that current savings avoids the VAT (Jenkins, 2006).



Second, in developing countries and also in some developed ones, the VAT is actually levied on only about 50% to 70% of the total value of goods and services consumed. Some goods and services are taxed at almost full rates while other items avoid taxation at the retail level. Some obvious examples are expenditures on health, education and social services. As a consequence, the purchase prices of these items will have a lower proportion of VAT content than goods and services which are subject to VAT at all stages of their production and distribution chains (Jenkins, 2006). Third, the poor tend to purchase a larger proportion of goods and services from the informal retail sector where the goods are either not taxed at all, or are more lightly taxed. In such countries, the higher income households purchase goods and services in retail outlets that are likely to fully comply with the tax rules. As a result, the share of consumption subject to VAT for higher income households tends to be greater than that for the poor (Jenkins, 2006).

The Economics of VAT Economics of VAT The case for consumption taxation cited by Hammond & Raboy (1995, p. 21) includes how the economists favored increased consumption taxation as a way to address its inefficiencies and distortions. The bias toward consumption is causing consumption-based taxes to be reconsidered as away to promote economic growth and boost savings and investment. The basic theory is that making consumption more expensive will induce people to save more, increasing the domestic resources available for investment and enhancing prospects for strong economic growth.



According to the American Heritage Dictionary (2004), Leisure is freedom from time-consuming duties or activities. Earlier writers made a prediction how mass media could destroy the public. On the contrary, Marxist writers drew attention to how the mass media and other leisure industries were formed and run not only for profit but also to produce compliant workers and consumers. For example, they argued that people who became accustomed to being passively entertained would be equally submissive at work and politically (Roberts, 2006). As indicated by Roberts (2006, p.183), it is argued that consumer capitalism blurs the distinction between human needs and artificially created wants, thereby locking people into a work-and-spend regime, creating ever-expanding markets for profit-seeking businesses that sell consumer goods and services, which spread superficial contentment or, when people remain unhappy, persuade them that this must be their own fault. The use of leisure are said to be controlled by the interests of commerce rather by our own needs. The growing supply of goods and services has lengthened people’s chances to live the way they want to and enlarge their freedom. Consumption Producers create goods for later consumption. People can only consume if they also work. Some types of consumption deplete the value of the product easily while some deplete more slowly like the purchase of a car or a house. Normally, people expect that the value they earn, like salary they receive, is of greater value of the effort they exerted. They go to work in order to spend what they have been paid for in their free time (Roberts, 2006, p. 184).

CHAPTER 2: REVIEW OF RELATED LITERATURE Consumerism Leisure and consumption


There have been claims that consuming now dominates people’s leisure. It is true that nowadays most of us celebrate our holidays and other celebrations out and that when we spend leisure time at home, we typically use goods such as televisions, sound system, furniture, and the like. But does this mean that our leisure is dominated by consumption? The expenditure of many households is consumed by essentials. Roberts (2006, p. 203) further explained that “they are adrift from the strata whose members are able to spend the winter months planning their summer holidays, spend the preceding months spending towards the Christmas celebrations, who scan the color supplements in search of purchasing suggestions and who can afford to go lifestyle shopping on occasional Sundays.” Leisure is broader than consumption (Mullett, 1988) conceptually and in terms of the reality of people’s everyday lives. The public sector has played and still plays a major, not a residual, role in leisure provision and, although it is now subject to greater commercial pressures than in the past, its sustenance still depends primarily on political will, not market forces.



As part of the research process, the researchers first consulted the central library situated in the University of Santo Tomas and the internet for data which are necessary to support this paper. Before making the survey, the researchers brainstormed on the possible questions that should be included on the survey forms and reflected on its relevance on how the questions would help them in conducting the research. The main aim of the survey forms is to be the principal source of information in order to support the study. The quantitative data were gathered by sending out one hundred survey forms to the respondents. The said forms were distributed by the researchers individually between January 28, 2009 and February 06 of the same year. Only eighty-seven survey forms were retrieved but only seventy are qualified respondents. The said survey was the basis for answering the problems stated in Chapter 1. After collecting and studying the survey, the responses were then tallied and interpreted through graphs. In addition, the declarative form was used in order to support both quantitative and qualitative responses. The respondents chosen by the researchers for this research are the breadwinners residing in Manila within the income bracket of not more than Forty Thousand Pesos monthly. The researchers specifically chose the said amount, which is already after tax, because if divided by thirty-one days, they have approximately One Thousand Three Hundred Pesos daily allowance which is positive in terms of financial capacity. The researchers believe that the said amount of money could still enable them to purchase things that they need and want. Breadwinners usually carry the financial burden of the family. Most of the time, the monthly salary they receive is allocated on important expenditures such as



foods, school allowance, payment for utility bills, and the like. They usually no longer spend on products which they want--products that are not a necessity but more of a form of pleasure and entertainment. For convenience purposes, the researchers distributed the said forms to those who they are personally related. They also favored some of their friends and families to hand out the said forms to those who they know as well. The survey forms were distributed and let the respondents answer with utmost honesty and within reasonable time to familiarize them with the content of the survey. Each participant was asked whether they are still capable of acquiring household leisure commodities amidst the implementation of the Value Added Tax. They were asked on how they perceive the implementation of VAT--either they are proponents or opponents and if they think its implementation affects their household leisure consumption. They were also asked about the frequency of the said consumption and the possible reasons why their answers turn out the way they answered it. Also, the examples of such leisure which they acquire were also asked. A sample survey form is contained in the Appendix for a complete reference of the questions. Aside from the responses of the respondents, books, the internet, and other relevant source materials have been used by the researchers to gather information. Responses to the survey forms were expressed quantitatively in frequency and percentage. In analyzing the data, the formula used was:



Where: p = percentage f = frequency n = sample size



Data were expressed using graphs for us to see easily the distribution of the respondent’s according to their preferred answers, which then leads to a faster drawing of conclusion for each table. Having a great number of respondents and choices, graph is the simplest and accurate manner of presenting and observing the results. The following tables show the frequency and percentage pertaining to the respondents’ profile. Figure 1

As shown in the graph, majority of the respondents are within eighteen to twenty-eight years old (47%). These are followed by respondents within twenty-nine to thirty-nine years old (30%). Lastly, the least number of respondents fall on the age bracket of 40 above (23%). This indicates that there are many young individuals who, despite their age, are already breadwinners.



The researchers also want to know the distribution of the respondents in terms of gender. The above graph shows that there are more male breadwinners (64%) than female (36%). Figure 1.2

The graph shows that majority of the respondents are single (57%) followed by those who are married (43%). There are many single breadwinners than those who are married because after graduating, or in most cases some discontinue their studies, they prioritize looking for jobs in order to provide financial support to their



family right away. They do not usually search or settle with a partner since they want to help and do not want to add an extra burden. Those who are married, on the other hand, are supporting their own family. Figure 1.3

The above figure shows that bulk of the respondents have one to five family members (52%). Next in order are those who have six to ten family members (45%) and eleven above (3%), respectively. Only sixty-three respondents answered the question. The Household Leisure Consumption Decision of breadwinners also depend on the number of family members they are supporting because the more the number of supported family members, the more they limit their passive leisure consumption.



Most of the respondents currently are employed (66%). These are followed by small business owners (20%), by working student (11%), and other occupation (3%) such as taxi driver. There are a significant number of employed breadwinners because having your own business would require capital which would be financially burdensome for the family especially when there is only one who is earning income.



A greater part of the seventy respondents are College Graduates followed by College Undergraduates, High School Graduates and High School Undergraduates. Others are currently College Students. Figure 1.6

Majority of the respondents are distributed at 46 % within the income bracket of Ten Thousand and One Pesos to Twenty Thousand Pesos. Next in order fall on One Thousand to Ten Thousand Pesos (31%) and Twenty Thousand and One Pesos to Forty Thousand Pesos (23%).



The analysis and interpretation of data are presented in this chapter in accordance with the problems posed in Chapter 1. The first problem is: How many of the respondents favor the implementation of Value-Added Tax on consumption goods? Figure 2

The above figure shows that respondents who oppose VAT outnumbered those who are undecided and who responded positively.



When asked why the participants favor the implementation of VAT, eleven respondents reasoned out that the government will have increased revenues that would pave the way for new projects, eight respondents said that the said tax will help the government to support its expenses for the citizens and seven respondents believe that it could help pay the debt of the Philippines from other countries.



When asked why the participants do not favor its implementation, forty-seven said that its imposition resulted to expensive goods, forty-three respondents said that it is a way of government corruption, thirty-five respondents believe that it is very burdensome, thirty-one respondents said that it is very high, and two cited other reasons. In line with the researchers’ expectations, majority of the respondents oppose the implementation of the VAT. They believe that it does not help economic growth and development of the country but rather give way to government corruption and rapid price hike of commodities. Considering that our respondents are all breadwinners, they are sensitive with regards to their consumption of goods. Only 16% of the respondents are in favor to the VAT. Many of them justify that it greatly contributes to the government funds in raising projects. Although there are issues on economics and politics, according to them, the development program of our government are still ongoing.



The participants were also asked whether they think VAT is just or not. From their responses, majority reckon that it is not. This is followed by those who are undecided and who answered Yes.



When asked why the participants think that VAT is just, seven respondents believe that the said tax is just because all are paying. Five respondents believe that they could see where their money is being used, and four respondents think that they actually feel that VAT helps the economy improve.



When asked why the participants think that VAT is not just, fifty-two respondents said it is a burden. Fifty respondents said it affects basic needs and forty-eight responded that it leads to too high expenses. Forty-three said it is a form of government corruption. Thirty-seven said it affects more the low-income earners. Thirty-five said it is a very high rate, and four cited other reasons. Majority of the respondents believe that VAT will not resolve the economic crisis of the Philippines (Appendix B) and that the government based it on the personal gains and benefits of government officials (Appendix C). Figure 3 shows that most of our respondents viewed that VAT is unjust as it results to an increase in the prices of goods and affects their basic needs consumption. Some believed that the tax rate imposed on every commodity is too high that it leads to personal gains/ benefits to some government officials. Only 12% agreed that VAT is just for all are obliged to pay. Others see the fruit of their contribution as it adds to the improvement of the economy.



How many of the respondents think that the implementation of VAT affects their household leisure consumption? Figure 4

The graph shows that majority of the respondents believe that the implementation of the Value-Added Tax affects their household leisure consumption. It lessens or limits their financial capacity of acquiring leisure products.



The effects of VAT on household leisure consumption of the respondents are presented above. The above figure shows that majority of the respondents buy lesser amount of leisure commodities which is choice 1 (34%). This is followed by buying leisure products only after satisfying basic needs (26%). Next in order are not buying leisure products at all (15%), buying more of basic necessities (12%), less buying of basic necessities (12%), and buying more leisure commodities (1%), respectively. As breadwinners, our respondents budget their consumption in a way that they prioritize basic needs over others. Since their salary income is sufficient enough for everyday expenses, they tend to limit their spending particularly on their leisure consumption. Before engaging in leisure activities or purchasing luxury products they make sure that their basic necessities are satisfied.

CHAPTER 4: PRESENTATION AND ANALYSIS OF DATA The third problem is: How many of the respondents commodities other than basic needs? Figure 6 are still capable of



From the monthly income received by the respondents, majority are still capable of spending on leisure. A very close amount responded that they are no longer capable of spending on leisure. Filipinos, by culture, are the type of people who wants to enjoy their life. Because of this, breadwinners tend to sacrifice some of the basic needs or save some money for leisure.



The respondents who answered Yes were further asked to check the different kinds of leisure products listed in the survey forms which they consume. Shopping has the most number of responses specifically thirty-eight out of thirty-eight respondents. This is followed by the purchase of foods of the same number of respondents, gadgets of thirty-one respondents, DVDs of twenty-nine respondents, vices of twenty-four respondents, books of nineteen respondents, appliances of twelve respondents and other products of seven respondents. Shopping and having lunch/dinner in restaurants are usually done during weekends. Breadwinners find leisure time during weekends to recharge themselves after a hard week of work. The researchers think that it is for this reason that shopping and buying food have the highest percentages of the type of leisure products they acquire.



In general, most respondents answered sometimes. Next in order said that they always consume things for leisure. These are followed by those who seldom or rarely consume it and those who do not consume it at all. Implementing VAT leads the breadwinners to tighten their belt to live within their means. For this reason, most of them have to spend have to spend on leisure products not on a regular basis (sometimes). Perhaps those who can afford to always consume such products are those who do not have student/s studying in schools, especially, in a private one.



Do breadwinners spend large amount of money in acquiring leisure? Figure 9

Most of the respondents do not consume large amount of money for leisure consumption.



Those who answered Yes were further asked for the amount of money they spend for such consumption, 31% spend One Hundred to One Thousand Five Hundred Pesos, 45% spend between One Thousand Five Hundred to Twenty Thousand Pesos, and 24% spend more than Twenty Thousand Pesos.

CHAPTER 4: PRESENTATION AND ANALYSIS OF DATA The fifth problem is: What is the frequency of their consumption of leisure? Table 1


Percentage Distribution of Respondents on the Frequency with which they Engage in the following Activities in the past 3 months

Situation 1 Situation 2 Situation 3 Situation 4 Situation 5 Situation 6 Situation 7 Situation 8 Situation 9 Situation 10

Frequently 1.43% 1.43% 4.29% 17.14% 10% 1.43% 8.57% 0% 7.14% 50%

Occasionally 20% 15.71% 38.57% 38.57% 34.29% 8.57% 12.86% 7.14% 28.57% 21.43%

Seldom 20% 38.57% 34.29% 35.71% 31.43% 30% 25.71% 15.71% 34.29% 20%

Never Not Sure 55.71% 2.86% 31.43% 0% 22.83% 0% 8.57% 0% 38.57% 0% 50% 7.14% 42.86% 4.29% 77.15% 0% 27.14 4.29% 5.71% 0%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

As for situation 1, which is playing adult games such as Casino, most respondents never spend on such activity while the least number of respondents engaged in the said activity frequently for the past three months. As for situation 2, which is buying books for pleasure, most respondents seldom spend on it while the least number of respondents engaged in the said activity frequently. As for situation 3, which is going on a family outing, most respondents occasionally spend on it while the least number of respondents engaged in the said activity frequently. As for situation 4, which going out for the evening for drinks and entertainment such as bars and mall, most respondents occasionally spend on it while the least number of respondents never engaged in the said activity.



As for situation 5, which is going to the movies, most respondents never spend on it while the least number of respondents engaged in the said activity frequently. As for situation 6, which is visiting art galleries and museums, most respondents never spend on it while the least number of respondents engaged in the said activity frequently. As for situation 7, which is collecting or making something, most respondents never spend on it while the least number of respondents are unsure on the frequency on which they engaged in the said activity. As for situation 8, which is attending opera, ballet, or dance performances, most respondents never spend on it while the least number of respondents seldom engaged in the said activity. As for situation 9, which is buying new appliances, most respondents seldom spend on it while the least number of respondents are unsure on the frequency on which they engaged in the said activity. As for situation 10, which is watching television/using the computer for fun, most respondents spend on it frequently while the least number of respondents never engaged in the said activity. To sum the result from the above table, 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.



Average income earners have to adjust their activities depending on priorities. Those who have no or less dependents can afford higher frequency of leisure activities than to those who have heavy burden. Figure 10

The respondents whose answers range from seldom to never were further asked about their view on why their household leisure consumption is limited. Table 16 shows that choice one, which is basic necessities first, was answered by the majority of the respondents. This is followed by choice two, which is not included in the budget or has no financial capacity, choice three and four, respectively. Some respondents left the question unanswered.



The above table show that majority of the respondents believe that the post-purchase reason why their leisure consumption is limited is that it demands additional utility bills for consumption of such leisure (47%). Next is that it demands high maintenance cost (38%). Lastly, few respondents said that if they spend on leisure, they might not help but spend on it continuously (15%). Some respondents left the question unanswered.



Credit Invoice VAT is one form of imposing Value Added Tax on producers of goods and providers of services. Hence, it is treated as a sales tax. Since VAT is an indirect tax, the burden can be passed on to consumers by paying an additional amount for the cost of the goods and services they purchased based on 12% rate. From 10%, the rate has risen to 12% which imply additional burden to consumers. Goods and services become expensive but people can’t help but to spend on it especially when it is a necessity. In relation to that, people limit their consumption on what they want which include leisure products. Such products include going to the mall, watching a movie, buy new appliances and many more. From the figures shown on Chapter 4, the researchers therefore conclude that there is a relationship that exists between Value Added Tax and the Household Leisure Consumption not only among breadwinners but also to other individuals. Majority of the breadwinners who participated in this research reckon that the Value Added Tax imposed on consumption goods affect their household leisure consumption pattern. Wants are not necessities but no one is deprived of spending on it. They also include in their consumption decision the post-purchase leisure consumption. Majority of them considers additional cost on utilities if they spend on it. Example of which is that if they buy a DVD player, they would have to buy DVD movies and would also increase their electricity bill. Another example is buying a new car. Petroleum products are not exempted from VAT too. Therefore, it would demand additional cost for gasoline and also for maintenance. 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 those findings, the



researchers concluded 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. Although majority of the breadwinners believe that their consumption of leisure is limited due to VAT, most of them are still capable of spending on passive leisure products/activities from time to time such as shopping and watching TV. While they spend on it most of the time, most of them do not spend large amount for such products/activities. The researchers conclude that other factors, not just the burden imposed by Value-Added Tax, affect the consumption pattern of breadwinners on passive leisure products/activities. Such factors include the monthly income they are earning and the number of family members they are supporting. They are more likely to limit their leisure consumption if they do not have sufficient income to support their families and that if they are supporting quite a large number of family members especially if the said members are still studying.



The researchers recommend that middle class families and those individuals who receive low income should (1) limit their consumption on leisure products due to value added tax which are imposed to all products that we are consuming; (2) be sure to satisfy basic necessities first than any others products which are not really important.

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