1

CHAPTER I

THE PROBLEM AND ITS SCOPE

Introduction

Sari-sari stores are small retail stores that are ubiquitous in the Philippines. They sell a

wide variety of goods, including foods drinks, household items, and personal care products and

or prime commodities. Sari-sari stores are an important part of the Philippine economy,

providing employment and livelihood opportunities for millions of people (Brian finch, 2020)

Sari-sari store provide convenient access to essential goods and services, offer a wide variety of

products and services at competitive prices. This is especially important for low-income

households who may not be able to afford to shop at larger supermarkets. Sari-sari stores are

often located in close proximity to residential areas, making it easy for people to purchase the

items they need without having to travel long distances. Sari-sari stores are typically family-

owned and operated. They are often located in residential areas and are open long hours, making

them a convenient place for people to shop for their daily needs and also offer a variety of

services, such as: Bill payments: water bills, electricity bills, phone bills. Money transfer

services: remittance centers. Ticket sales: bus tickets, ferry tickets, movie tickets, (Business

diary, 2018).

Sari-sari stores faced a number of challenges, such as increasing competition from larger

retailers that there has been a proliferation of large supermarkets and convenience stores in the

Philippines. These large retailers offer a wider variety of products and services at competitive

prices. This has made it more difficult for sari-sari stores to compete. The rising cost of goods,
 2

such as food and fuel, has also had a negative impact on sari-sari stores. Sari-sari stores have to

pass on the increased costs to their customers, which can make their products less affordable, and

government regulations, Sari-sari stores are subject to local taxes, such as business permits,

signboard permits, and annual fees (Alburo, A. G. 2019).

Sari-sari stores operating without a permit are subject to a number of sanctions, including

cessation of operation, fines, imprisonment, confiscation of goods, and revocation of business

permit. The specific sanctions imposed on a sari-sari store operating without a permit may vary

depending on the circumstances of the case. City Government may confiscate the goods of the

sari-sari store if the store is found to be operating without a permit. It is important for sari-sari

store owners to secure the necessary permits from the City Government before operating their

stores. This will help to ensure that they are in compliance with the law and avoid any potential

penalties, Quisumbing, M. A. R., & Estudillo, J. P. C. (2017).

The imposition of local taxes on sari-sari stores is a controversial topic. Some people

argue that sari-sari stores are already struggling to make a living, and that imposing additional

taxes on them will only make things worse, they states that local taxes are unfair and

burdensome. They argue that they are already operating on tight margins and that local taxes

make it even more difficult for them to stay afloat, local taxes put sari-sari store owners at a

competitive disadvantage relative to larger retailers. Larger retailers often have more resources to

absorb the cost of taxes, while sari-sari store owners may have to pass on these costs to

customers. This can make it difficult for sari-sari stores to compete with larger retailers. Others

argue that sari-sari stores should pay their fair share of taxes, and that the government should

collect taxes from all businesses, regardless of size, (Gutierrez & Gamboa, 2019).
 3

The effect of local taxes on sari-sari store owners can be both positive and negative and

also vary depending on a number of factors, such as the type of taxes imposed, the rates at which

they are imposed, and the financial situation of the sari-sari store. On the positive side, local

taxes help to fund important public services, such as education, infrastructure, and healthcare,

(Estudillo, J. 2017). This can benefit sari-sari store owners and their customers by creating a

more livable and prosperous community. Additionally, some local governments offer tax breaks

and other incentives to small businesses, including sari-sari stores. This can help sari-sari store

owners to save money and grow their businesses.

However, the negative effects of local taxes on sari-sari store owners can be significant.

Local taxes can increase the cost of doing business, which can lead to higher prices for

customers. This can make it difficult for sari-sari stores to compete with larger retailers.

Additionally, the burden of local taxes can be disproportionately high for sari-sari store owners,

who often operate on tight margins. This can make it difficult for them to stay afloat financially ,

(Francisco, P. (2018). Overall, the effect of local taxes on sari-sari store owners is complex and

depends on a variety of factors. However, it is important to be aware of both the positive and

negative effects so that sari-sari store owners can make informed decisions about their

businesses.

The imposition of taxes on sari-sari stores has emerged as a topic significant interest and

concern among policymakers, economists, and communities. Taxation policies whether direct or

indirect, can profoundly impact the operations, profitability, and sustainability of these micro-

enterprises operating within Dapitan City specifically in the Barangay of Ba-ao. This study

endeavors to delve into the multifaceted effects of tax imposition on sari-sari stores, aiming to
 4

provide a comprehensive analysis of its implications on various stakeholders and the broader

economy.

Serrano, R.B. (2020) conducted a study on “The impact of local taxes on the growth

potential of sari-sari stores in the Philippines”, the study examined the impact of local taxes on

the growth potential of sari-sari stores in the Philippines. The study found that local taxes were a

major obstacle to the growth of sari-sari stores, limiting their ability to expand their inventory.

These studies collectively highlight the significant impact of local taxes on sari-sari stores,

posing challenges to their profitability, sustainability, and growth potential. Addressing these

challenges through policy interventions and support programs can help strengthen the sari-sari

store sector and promote a more equitable and sustainable business environment.

The objectives of this research are manifold. Firstly, it seeks to assess the immediate

financial ramifications of taxation on sari-sari store owners, examining its influence on profit

margins, pricing strategies, and business viability. Secondly, the study aims to explore the

behavioral responses of consumers to potential price changes resulting from tax imposition.

Understanding how customers adapt their purchasing habits in response to altered prices is

pivotal in evaluating the market dynamics. Moreover, this research endeavors to investigate the

wider socio-economic consequences taxing sari-sari stores. It will explore the potential effects on

employment within these small enterprises, the overall local economy, and the accessibility of

essential goods for low-income households. Additionally, the study will scrutinize the

compliance challenges and administrative burdens faced by sari-sari store owners in adhering to

tax regulations. This research “Analyzing the Effects of Tax Imposition on Sari-Sari Stores”

examines the impact of various taxes, including local, income, and value-added taxes, on the

operations and profitability of sari-sari stores in Dapitan City. While the study provides valuable
 5

insights into the direct effects of taxes on sari-sari stores, there remain several research gaps that

warrant further investigation.

Existing studies primarily focus on the on the long-term effects of taxes on sari-sari store

viability, growth, and sustainability. There is a need for more research on the immediate impact

of tax imposition on sari-sari stores, such as increased costs and decreased profits.

Theoretical/Conceptual Framework of the Study

This Study is anchored on the theory of Tax incidence which examines the distribution of

the burden of taxation among different groups in society. In the context of sari-sari stores, tax

incidence theory helps determine how the imposition of local taxes affects the profitability of

sari-sari stores and ultimately, the prices of goods and services they sell. John Stuart Mill (1950s

and 1990s): Mill, a Scottish philosopher and economist, is considered one of the founding fathers

of tax incidence theory. In his book “Principles of Political Economy,” he discussed the concept

of “shifting” of taxes, the idea that the burden of a tax may not fall entirely on the person or

entity who legally responsible for paying it. Tax incidence theory can be used to predict how a

change in tax rates or the tax base will affect the distribution of economic welfare. This

information can be helpful in designing tax policies that are intended to have specific

distributional effects.

According to John Stuart mill originator of tax incidence theory, this Theory help in

assessing the effects on sari-sari store profits: Sari-sari stores are often small, family-owned

businesses that operate on thin margins. Tax incidence analysis can help researchers understand

how local taxes might affect the profits of these businesses, which could have implications for

their ability to stay afloat and provide employment. In addition to these specific applications, tax
 6

incidence theory can also provide a broader framework for understanding the potential effects of

local taxes on sari-sari stores and the Dapitan City economy. By considering the various

economic and behavioral factors that influence how taxes are borne, researchers can gain a more

comprehensive understanding of the potential impacts of these taxes and inform policy decisions

aimed at promoting economic growth and social equity.

Tax incidence theory can provide valuable insights into the potential effects of imposing

local taxes on sari-sari stores in Dapitan City by assessing how the costs of these taxes are likely

to be distributed among different stakeholders, such as consumers, sari-sari store owners, and

suppliers, researchers can gain a deeper understanding of the potential effects of these taxes on

the local economy of Dapitan City. The Tax incidence theory used to determine the effects on

the Imposition of Local taxes among sari-sari stores in Dapitan City, their customers, and the

local economy.

The schema of this study shows that the sari-sari stores tax rate, location and Business

registration status are independent variables and the effects of impose local tax on sari-sari stores

such as: compliance level, sales revenue and profitability of sari-sari stores are the dependent

variable and the intervening variables are years of Operation and tax knowledge and

understanding.

An arrow is connected from independent variables to dependent variables to show that

there is a significant relationship between sari-sari store and imposition of local taxes.

Independent Variables Dependent variables

Sari-Sari stores in Dapitan City The effect of impose local tax
Tax rate on sari-sari stores

Location • Compliance Level

Business Registration Status • Sales Revenue

• Profitability
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Intervening Variable
 Years of Operations.
 Tax knowledge and
Understanding

Figure 1. Schema of the Study

Statement of the Problems

This study mainly focuses on determining the effects of the imposition of local taxes

among sari-sari store owners at Dapitan City towards their financial income. Specifically, this

study aims to answers the following questions:

1. What are the effects in imposition of local taxes on sari-sari stores in terms of:

1.1. Operating cost

1. 2. Profit margin

2. To what extent the imposition of the local taxes affects the sari-sari store owners?

2.1. Financial management

2.2. Savings

2.3. Income management

3. Determine the extent of imposing local taxes whether it affects the profitability of every sari-

sari store owners or not.

4. Determine the importance between tax compliance and profitability.

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Hypothesis

Ho1. The imposition of local taxes on sari-sari stores in Dapitan City has a significant negative

impact on their profitability.

Ho2. Sari-sari store owners in Dapitan City are using various strategies to cope with the burden

of local taxation, such as passing on the cost of taxes to customers, reducing their profit

margins, or finding ways to avoid paying taxes altogether.

Ho3. The profitability and competitiveness of sari-sari stores have a positive and significant

impact on their tax compliance.

Ho4. The mediating effect of tax burden and profitability and competitiveness on the relationship

between the imposition of local taxes and tax compliance of sari-sari stores is significant.

Significance of the Study

This study is significant in determining the number of sari-sari store owners that have either

positive or negative effects regarding imposition of local taxes. And help them to identify the

difference between running a business with fully registered and not registered at all. The result of

this study will provide great benefits to the following:

1. Community. The result of this study will provides better opportunity for greater trust and

respect to the imposition of local taxes. This will serves as the reference of the sari-sari

store owners to sustain their financial income and the status of their business in the long

run.
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2. Local Governments. The result of this study will be beneficial to the local government

officials who want to helps sari-sari store owners to be financially stable and totally

secure their business performance.

3. Researchers. The result of this study will also beneficial to the proponents through

gaining more ideas and improves knowledge regarding with the sari-sari store business,

financial sustainability and income management.

4. Sari-sari Store Owners. It will serves as the guide to the sari-sari store owners on how

to maintain the sustainability of their income while paying monthly dues and to take

informed decisions, through fully managed their financial income which contribute future

success of their business.

Scope and Delimitation of the Study

This stu1dy mainly focuses in determining the effects to the income of sari-sari store

owners in imposing local taxes among sari-sari store in Dapitan City. This is limited only to the

respondent who owns a sari-sari store located in Barangay Ba-ao and Barangay Ilaya, Dapitan

City.

The researchers will conduct a survey and used a non-probability sampling to disseminate

the survey questionnaire to the suitable respondents.

Definition of terms

Competitiveness. The ability of a business to competes with other businesses in the same

industry.
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Imposition of local taxes. The acts of levying local taxes on businesses and individuals.

Local taxes. Taxes that are levied by local governments, such as municipalities, cities and

provinces.

Profitability. The ability of a businesses to generate profits.

Sari-sari stores. The small-family-owned business that sell a variety of goods, including

foods, drinks, snacks, and household items.

Tax burden. The amount of tax that a taxpayer pays.

Tax compliance. The acts of paying taxes in accordance with the law.

Tax penalties. Fines or other penalties that are imposed for failure to comply with tax

laws.

Tax exemptions. Deductions from the tax base that reduce the amount of tax that is owed.
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CHAPTER II

REVIEW OF RELATED LITERATURE

A number of foreign and local literature that provided data and information related to the

studies and which have some bearing with this present investigation are presented in this paper.

Sari-sari stores are essential to the Philippine economy, and they play a vital role in

providing basic goods and services to communities. However, the imposition of local taxes on

sari-sari stores can be a burden on these small businesses, especially during difficult economic

times,” Arsenio & Balisacan, (2017). They provide jobs and contribute to GDP growth. Sari-sari

stores are also an important source of goods and services for millions of Filipinos, especially

those who live in rural areas. In recent years, there has been growing concern about the impact of

local taxes on sari-sari stores. Some argue that local taxes are too high and are squeezing the

profits of sari-sari store owners. Others argue that local taxes are necessary to fund essential

government services.

In the Philippines, sari-sari stores are typically required to pay the following local taxes;

Business tax, Occupational permit fee, Sanitary permit fee, Fire safety permit fee, the specific tax

rates vary depending on the locality, some local governments have also implemented exemptions

or preferential tax rates for sari-sari stores, Pagara, (2020). Sari-sari stores that operate without a

permit in the Philippines are subject to a number of sanctions, including fines, closure of

business, and even imprisonment. The severity of the sanctions imposed will vary depending on
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the local government unit (LGU) where the sari-sari store is located, as well as the specific

circumstances of the case (Bureau of Internal Revenue, BIR, (2020).

The penalties for operating a sari-sari store without a business permit depend on the

severity of the offense. The minimum penalty is a fine of ₱500.00, while the maximum penalty is

a fine of ₱5,000.00 and/or imprisonment for up to six months BIR, (2020). The most common

sanction imposed on sari-sari stores that operate without a permit is a fine. The amount of the

fine will vary depending on the LGU, but it is typically a percentage of the gross annual sales of

the business, In addition to fines, the LGU may also order the closure of the sari-sari store until

the business permit is secured. This can be a significant financial loss for the business owner,

especially if the sari-sari store is their only source of income, in some cases, the business owner

may also be imprisoned for operating a sari-sari store without a business permit. However, this is

typically only done for repeat offenders or if the business owner is also found to be violating

other laws or regulations (Bureau of Internal Revenue, BIR, (2020).

According to the National Economic and Development Authority (NEDA), sari-sari

stores contribute 1.5% to the Philippine GDP and employ over 3 million people. Sari-sari stores

are also more resilient to economic shocks than larger businesses. N. P. Ogbonnaya et al., Sari-

sari stores are also an important source of goods and services for millions of Filipinos, especially

those who live in rural areas. A study by the Philippine Chamber of Commerce and Industry

(PCCI) found that 70% of sari-sari stores are located in rural areas. The study also found that

90% of sari-sari stores are owned by families who live below the poverty line Feldman &

Montgomery, (2016). Ang A, (2020) State that Local taxes are an important source of revenue

for local governments. However, local taxes can also be a burden on small businesses, such as

sari-sari stores. A study by the Philippine Institute for Development Studies (PIDS) found that
 13

local taxes can have a negative impact on the profitability of sari-sari stores. The study also

found that local taxes are disproportionately borne by low-income sari-sari store owners. Patricia

Y. Perez, ( 2021), found that the informal sector plays a significant role in the Philippine

economy, but it is also vulnerable to economic shocks and government policies. She argued that

the government should implement policies that support the informal sector, such as reducing the

regulatory burden on small businesses and providing them with access to financial services.

Local taxes

Local Taxes on Small Businesses” conducted by the National Economic and

Development Authority (NEDA) in 2018, these studies suggest that the imposition of local taxes

can have a significant negative impact on the profitability of sari-sari stores. This is because sari-

sari stores typically operate on low margins and have limited financial resources. The burden of

local taxes can also discourage sari-sari store owners from formalizing their businesses, which

limits their access to government services and support (Bates, 2015). Maria & Teresa,( 2018)

local taxes have a significant negative impact on the profitability of informal businesses,

including sari-sari stores, the challenges the Sari-Sari store owners encountered were Debts,

Thefts, and High Competition. It mentioned that family was the primary motivation for the

respondents to overcome problems. Sari-sari store owners experience debt due to their business

operations. A study by (Ofreneo and Pascual, 2019), found that sari-sari stores in the Philippines

pay an average of 12.5% of their gross sales in local taxes. This is significantly higher than the

effective tax rate of other types of businesses, such as corporations (11.8%) and small and

medium-sized enterprises (10.1%), The study also found that the imposition of local taxes on

sari-sari stores has a number of negative consequences, including: Reduced profitability, Higher

prices for consumers, Compliance costs, Discouragement of formalization. Anyadike-Danes,

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(2017) States that high tax burden can reduce the profitability of sari-sari stores, making it

difficult for them to survive and grow, Sari-sari stores may pass on the cost of local taxes to

consumers in the form of higher prices, Sari-sari stores may incur significant costs in complying

with local tax regulations, high tax burden may discourage sari-sari stores from formalizing their

businesses, which can limit their access to credit and other financial services.

Sales taxes

The first sales tax in the United States was enacted by the state of West Virginia in 1932.

Other states quickly followed suit, and by the mid-1940s, sales taxes were widespread

throughout the country. The popularity of sales taxes can be attributed to their simplicity and

efficiency: they are easy to collect and administer, and they are relatively immune to tax

avoidance, as stated by Richard A. Musgrave, (2019) , an American economist. Sales tax is a

type of consumption tax levied on the sale of goods and services. It is a broad-based tax,

meaning that it applies to a wide range of goods and services. Sales taxes are typically

administered by state and local governments, and they are an important source of revenue for

these governments.

The incidence of sales tax refers to who ultimately bears the burden of the tax.

Economists generally agree that sales taxes are regressive, meaning that they disproportionately

burden lower-income households. This is because lower-income households spend a larger share

of their income on consumption than higher-income households, Wallace E. Oates, (2018). The

effects of sales taxes on the economy are complex and have been the subject of much debate.

Some economists argue that sales taxes can discourage economic activity by raising the price of

goods and services. Others argue that sales taxes can encourage economic activity by shifting the

tax burden away from businesses and onto consumers, Bradford & Seligman,( 2018). Sales taxes
 15

are often criticized for their economic inefficiency. This is because they can distort consumer

and producer behavior in ways that lead to a loss of economic welfare.

Excise taxes

Excise taxes are taxes on the production, sale, or consumption of specific goods and

services. They are often used to discourage the consumption of goods that are considered to be

harmful to health, such as tobacco and alcohol, or to raise revenue for the government, Arnold

Harberger, (2018). Excise taxes have been used for centuries, and they are a common source of

revenue for governments around the world. In the United States, excise taxes account for a small

but significant portion of federal tax revenue, Excise taxes can be regressive, meaning that they

can have a disproportionately negative impact on low-income households. This is because low-

income households spend a larger proportion of their income on goods and services that are

subject to excise taxes, Wang, Jin, et al. (2021).

Excise taxes are often regressive in nature, meaning that they take a larger share of

income from low-income households than from high-income households. This is because low-

income households typically spend a larger proportion of their income on taxed goods, such as

cigarettes, alcohol and gasoline. Excise taxes directly increase the price of taxed goods, reducing

the purchasing power of low-income households. This can make it difficult for them to afford

essential goods and services, such as food, housing, and healthcare. Low-income households

often have limited alternatives to purchasing taxed goods, making it harder for them to avoid the

tax burden, Jonathan, and John A. Tauras (2007). For instance, for families living in areas with

poor public transportation, gasoline is a necessity, and they have little choice but to pay the

excise tax.
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Excise taxes also have an indirect impact on low-income households by raising the cost

of production for businesses. This can lead to higher prices for a wider range of goods and

services, further straining the budgets of low-income families. Low-income households often

lack the financial resources or access to tax breaks that could help offset the impact of excise

taxes. This means that they bear the full brunt of the tax increase, which can further exacerbate

existing financial hardship, Gould, John P., et al.( 2000).

Profit Margin

Study by the Philippine Institute for Development Studies (PIDS) found that average sari-

sari store profit margins range from 10% to 20%. This relatively low profitability is attributed to

several factors, including:

• Business Permits: Sari-sari stores are required to obtain business permits from their local

government units (LGUs). These permits may involve annual fees or renewal fees that can add to

the operating costs of a sari-sari store.

• High Competition: The sari-sari store industry is highly competitive, with numerous stores

operating in close proximity. This fierce competition puts downward pressure on prices, limiting

profit margins.

• Small Scale Operations: Sari-sari stores typically operate on a small scale, with limited

inventory and limited purchasing power. This makes it difficult to negotiate better prices from

suppliers, further reducing profit margins.

• High Cost of Goods: The cost of goods sold (COGS) is a significant factor affecting sari-sari

store profitability. Inflation and fluctuating market prices can increase COGS, leaving less room

for profit.
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• Limited Marketing: Sari-sari stores often lack the resources or expertise to engage in effective

marketing strategies. This makes it challenging to attract new customers and differentiate

themselves from competitors.

Manalili, J.S.( 2018), studied “The impact of local taxation on the survival of sari-sari

stores in the Philippine”. The study revealed that the impact of local taxes on sari-sari store

profit margins can vary depending on the specific taxes levied, the local tax rates, and the overall

profitability of the store. However, in general, local taxes can pose a significant challenge for

sari-sari store owners, particularly those operating in low-income areas or with limited profit

margins. (Manalili, J.S. 2018) , State that local taxes were a significant factor contributing to the

high mortality rate of sari-sari stores. The study also found that sari-sari stores in low-income

areas were more likely to be affected by local taxes. The cumulative effect of these local taxes

can have a significant impact on the profit margins of sari-sari stores, especially those operating

on tight margins. For small-scale sari-sari stores, even a small increase in costs can make it

difficult to stay profitable.

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Chapter 3

METHODOLOGY

In this study, the survey, explanatory and cross-sectional designs of quantitative research

were used. The determining the effect on Imposition of Local Taxes among Sari-sari Store

Owners of Dapitan City, Zamboanga del Norte.

Explanatory research is a results and conclusions that constitute the deepest level of

knowledge (Fidias G. Arias). It deals with the determination of causes and effects through

hypothesis testing. Cross-sectional is a study used to measures the adequate outcomes and the

exposures of the imposition of local taxes towards the participants. The Deductive Analysis

approach was also used to generalize accurate research findings to a certain extent of Imposition

of Local Taxes among Sari-sari Store Owners.

Research Environment

This study was conducted in Dapitan City, Zamboanga del Norte. The respondents of this

study were 50 sari-sari store owners, in which 60% of the respondents respectively mentioned

that local taxes couldn't affect the growth of their business. In fact, the local government of

Dapitan City offers other incentives towards small businesses, including the sari-sari store

owners of which, aside from security it will help to save and boost their respective businesses.

40% of the respondents mentioned that local taxes were disproportionately high for them as a
 19

sari-sari store owner, which often operate on a tight margin. It can be difficult for them to stay

afloat financially.

This study’s main goal is to investigate the effect on the imposition of local taxes among

sari-sari stores to determine how this factor affects their lives as the sari-sari store owners.

Research Respondents

The respondents of this study were limit to the 50 sari-sari store owners who established

their sari-sari store at Dapitan City. Specificall,the barangay of Ba-ao and Ilaya. This study

mainly focused on the sari-sari store owners who pay taxes to the local government unit and

more than 5 years in operation. The sari-sari store owners were purposively selected as

respondents of the study. Thus is to conforms that the most recent results.

Table 1. Presents the respondents of the Study.

Name of Barangay No. of Respondents Percentage

Ba-ao 25 50%

Ilaya 25 50%

Total 100%

Research Instruments

The sources of data were taken from the local government of Dapitan City and the sari-sari

store owners at Barangay Ba-ao and Ilaya, Dapitan City. The researchers conducted an interview,

surveys and opinion polls to the local government of Dapitan City and ask the authorize

personnel for their financial reports, budget documents, and audited financial statements often
 20

contain information on tax revenues, expenditures, and financial performance for the sources of

data.

And for the additional relevance of the data sources, the researchers look for the academic

literature, case studies, and research papers that offer valuable insights into specific aspects of

local taxation in the internet.

Scoring procedure

Scale Range Description Description

Rating

5 1 Excellent This rating indicates that the entities

being rated has performed exceptionally

well and meet the exceeded

expectations.

4 1.1-1.5 Very good This rating indicates that the entities

being rated has performed well and

meet the average expectations to a

significant degree.

3 1.6-2.0 Good This rating indicates that the entity

being rated has fall within the moderate

level of the expected performance.

2 2.1-2.5 Fair This rating indicates that the entity

being rated has fall below the moderate

level of the expected performance.

1 2.6-3.0 Poor This rating indicates that the entity

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being rated has performed below the

expectations and didn’t meet the desired

standards.

Validity of the Instrument

The survey instrument for the research entitled “Analyzing the effects of Local Taxes on

sari-sari stores in Dapitan City” is a valid and reliable instrument that can be used to collect data

on the impact of local taxes on sari-sari stores in Dapitan City. The research instrument appears

to have good content validity. The questions are relevant to the research topic and are likely to

elicit information about the effects of local taxes on sari-sari stores in Dapitan City. The

questions are also clear and concise and should be easy for sari-sari store owners to understand.

Examining content, construct, and criterion validity, researchers can ensure that the

instrument used in the study entitled “The effects of imposition of local taxes among sari-sari

store in Dapitan City” is a reliable and valid measure of the constructs of interest. This will

strengthen the credibility of the study’s findings and contribute to a better understanding of the

impact of local taxes on sari-sari stores in Dapitan City.

Ethical Consideration

Obtain informed consent from all sari-sari store owners who participate in the study. Clearly

explain the purpose of the research, the procedures involved, the potential risks and benefits, and

the participants’ right to withdraw at any time. Provide a written consent form for participants to

review and sign. Assure participants that their personal information and responses will remain
 22

confidential and anonymous. Explain how data will be stored and protected, and emphasize that

their identity will not be disclosed in any publications or reports arising from the study. Respect

the privacy of sari-sari store owners by minimizing the intrusion into their personal lives and

businesses. Collect only the data necessary for the research and avoid asking sensitive or

personal questions that are not directly relevant to the study.

Data Gathering Procedure

The researchers identify the specific local tax regulations that apply to sari-sari stores in

the particular jurisdiction, such as business permits, local sales taxes, or other applicable taxes.

They determine the specific data that needs to be gathered for tax assessment purposes, such as

sales revenue, inventory records, expenses, and other relevant financial data. And ask

permission to the owners of sari-sari stores and the local government of Dapitan City regarding

the survey that they need to impose. This can be done through direct communication with the

store owners and to the local government officials who are knowledgeable about the imposition

of local taxes.
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Gantt chart

Activities Sept. 3, Sept. Sept. Sept. Oct. 2- Oct. 16- Oct.30- Nov.

2023 4–15, 18-22, 25-29, 13, 27, 2023 Nov.10 13-28,

2023 2023 2023 2023 2023

Selection of

Group

Title

composition

Selection of

Research

adviser

Submission of

letter to

Research

adviser

Composition

of Chapter 1

Composition

of Chapter 2
 24

Composition

of

Chapter 3

Revision of

chapter 1, 2

and 3

Statistical Treatment

The following statistical tools were used in the study:

Tax-to-Income Ratio - This measure calculates the ratio of total taxes paid to total

income earned by individuals or entities. It provides an indication of the overall tax burden on a

specific group or population.

Income Tax Percentage - The business tax imposed to the entities specified under

Section 116 to 127 of the National Internal Revenue Code of 1997, as amended and required

under special laws. The income tax derived by this formula (((Taxable Income * 12) – X) * Y) /

12.

Where:

X = is the minimum value of the particular salary range

Y = is the respective percentage

 25

Weighted Mean – is a statistical measure that calculates the average tax rate by taking

into account the weights or importance assigned to different tax rates or categories. The weighted

mean is calculated by the following formula:

Weighted Mean = (Σ (Tax Rate * Weight)) / (Σ Weight)

Where:

Σ represents the sum of the values.

Tax Rate refers to the individual tax rates or categories.

Weight refers to the weights assigned to each tax rate or category.

Mean and Standard Deviation

Mean and standard deviation are statistical measures used to describe the distribution

of local taxes within a specific jurisdiction and measures the degree of variation or dispersion of

local taxes around the mean. The formula for calculating the mean and standard deviation as

follows:

Standard Deviation = √[(Σ (Local Taxes - Mean)²) / (n - 1)]

Where:

Σ – it represents that the sum of the values.

Local Taxes - refers to the individual local taxes collected within the jurisdiction.

n – it refers to the total number of local taxes.

T-Test
 26

t = (x1 - x2) / sqrt ((s1^2 / n1) + (s2^2 / n2))

Where:

t – is the t-value, which represents the difference between the means of the two groups

relative to the variability within the groups.

x1 and x2 - the means of the two groups being compared.

s1 and s2 - the standard deviations of the two groups.

n1 and n2 - the sample sizes of the two groups.

Regression analysis is a statistical process used to examine the relationship between the

imposition of local taxes and various factors that may influence tax revenue. Regression analysis

can be used to examine the relationship between the imposition of local taxes and various factors

that may influence tax revenue. It helps in understanding how changes in independent variables

impact the dependent variable (tax revenue) and allows for prediction and inference. It provides

a quantitative approach to understanding the relationship between the imposition of local taxes

and various factors. It helps policymakers and researchers gain insights into the factors that

influence tax revenue and make informed decisions based on the analysis.
 27

REFERENCES

Bashel, Y. F., Saidin, S., Ikhsan, E., & Azwar, T. K. D. (2022). JURIDICAL ANALYSIS OF

BUSINESS CONVENIENCE FOR MICRO, SMALL AND MEDIUM ENTERPRISES

(MSMEs) IN MEDAN CITY. International Journal of Educational Review, Law and Social

Sciences (IJERLAS), 2(5), 659–666. https://doi.org/10.54443/ijerlas.v2i5.377

Clément Malgouyres, Mayer, T., & Clément Mazet-Sonilhac. (2023). Who Benefits from State

Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms: Comment.

The American Economic Review, 113(8), 2270–2286. https://doi.org/10.1257/aer.20201753

Funahashi, T. (2023). Sari-Sari Stores as Sustainable Business by Women in the Philippines.

Base of the Pyramid and Business Process Outsourcing Strategies, 75–96.

https://doi.org/10.1007/978-981-19-8171-5_4

Kong, D., Xiong, M., & Qin, N. (2022). Business Tax reform and CSR engagement: Evidence

from China. International Review of Financial Analysis, 82, 102178.

 28

Melati, D., & Sari, E. (2023). THE IMPLEMENTATION OF NUISANCE PERMIT AND

CONTROL POLICIES TO ACHIEVE EXCELLENT SERVICE AT THE BANDUNG CITY

INTEGRATED SERVICE AND LICENSING AGENCY. Journal of Public Administration,

2(1), 92–105. https://doi.org/10.61317/jc.v2i1.51

Perception Of The Community And The Impact Of Social Responsibility Of The Polytechnic

University Of The Philippines. (2022). Journal for Educators, Teachers and Trainers, 13(6).

https://doi.org/10.47750/jett.2022.13.06.058

Suministrado, W. M. R., Fernandez, J. M., Ramos, A. M., & Rosete, M. A. (2023). The Effect

of the Pandemic on Micro, Small, and Medium Enterprises in CALABARZON. UJoST-

Universal Journal of Science and Technology, 2(1), 239–263.

https://doi.org/10.11111/ujost.v2i1.104

Wei, T., Zhao, X., Zhai, S., & Cao, L. (2023). Local government debt and corporate tax burden:

A perspective based on the trade-off of government tax collection and management. PLOS ONE,

18(7), e0287763–e0287763. https://doi.org/10.1371/journal.pone.0287763

Internet Sources

https://www.researchgate.net/profile/Noba_Hilvano/publication/

362229115_Small_Island_Spatial_Accessibility_The_Case_of_San_Vicente_Northern_Samar_P

hilippines/links/62e23fc09d410c5ff369efa5/Small-Island-Spatial-Accessibility-The-Case-of-

San-Vicente-Northern-Samar-Philippines.pdf?_sg

%5B0%5D=started_experiment_milestone&origin=journalDetail

https://www.aeaweb.org/articles?id=10.1257/aer.20201753

https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0287763
 29

https://www.researchgate.net/profile/Belinda-Abdon-Liwanag/publication/

367190300_SDCA_Asia-Pacific_Multidisciplinary_Research_Journal_Volume_4_Issue_1/

links/63c65747d7e5841e0bd4ec3f/SDCA-Asia-Pacific-Multidiscipli nary-Research-Journal-

Volume-4-Issue-1.pdf#page=58

Questionnaire on Analyzing the effects of Local Taxes on sari-sari stores in Dapitan City.
Directions: Please fill out the information needed and put check mark ( ) in the boxes that

corresponds to the information asked.

Name (Optional):_______________________________________________

Sex: Male Age: _____

Female

Section 1: Sari-Sari Store Owner Information

Name of sari-sari store owner : _______________________

Address of sari-sari store : _______________________

Years of operating a sari-sari store : _______________________

Section 2: Awareness of Local Taxes

1. Are you aware of the local taxes that sari-sari stores in Dapitan City are required to pay?
 30

Yes

No

If yes, what specific local taxes do you know of? (Please tick all that apply)

Business Permit

Excise tax

Sales tax

Value added Tax

2. Where did you learn about these local taxes? (Please tick all that apply)

City government announcements

Barangay officials

Tax consultants

Other sari-sari store owners

Other (please specify). _________________________

Section 3: Compliance with Local Taxes

3. Have you ever registered your sari-sari store with the city government?

Yes

No

If yes, have you been paying your local taxes regularly?

 31

Yes

No

If no, why have you not been paying your local taxes? (Please tick all that apply)

Lack of awareness

Financial constraints

Complex tax procedures

Fear of penalties

Section 4: Impact of Local Taxes on Sari-Sari Store Operations

4. Do you think the imposition of local taxes has a significant impact on your sari-sari store

operations?

Yes

No

If yes, how does the imposition of local taxes affect your sari-sari store operations?

(Please check all that apply).

Increases expenses

Reduces profits

Forces you to increase prices

Makes it difficult to compete with larger businesses

5. How has the imposition of local taxes affected the profitability of your sari-sari store?
 32

Increased profitability

Decreased profitability

No change in profitability

6. Have you had to raise your prices due to the imposition of local taxes?

Yes

No

7. Have you had to reduce your profit margin due to the imposition of local taxes?

Yes

No

Have you considered closing your sari-sari store due to the imposition of local taxes?

Yes

No
 33

8. What suggestions do you have for the government to help sari-sari stores cope with the

tax burden?

CURRICULUM VITAE

ANDRIE A. ELCAMEL
Address: Lower Turno, Dipolog City, Zamboanga
del Norte
Contact Number: 09483968334
Email address: andrieelcamel9@gmail.com

PERSONAL INFORMATION

Date of Birth : March 30, 2003

Place of Birth : Dipolog City
Age : 20
Gender : Male
Civil Status : Single
Citizenship : Filipino
Religion : Roman Catholic
Height : 5’9
Weight : 58 kg
Father’s Name : Amando L. Elcamel
Mother’s Name : Daisy A. Elcamel

EDUCATIONAL BACKGROUND
Primary Ba-ao Elementary School
 34

Ba-ao Dapitan City, Zamboanga del Norte

2008 – 2014

Secondary Zamboanga del Norte National High School

Turno Dipolog City, Zamboanga del Norte
2014 – 2020

Tertiary Jose Rizal Memorial State University

Dipolog City, Zamboanga del Norte
2020 – present
CURRICULUM VITAE

FILICITY J. IMPERIAL
Address: Relocation, Olingan Dipolog City
Contact Number: 09635631146
Email address: fimperial02@gmail.com

PERSONAL INFORMATION

Date of Birth : September 23, 2023

Place of Birth : Dipolog City
Age : 21
Gender : Female
Civil Status : Single
Citizenship : Filipino
Religion : Roman Catholic
Height : 5’0
Weight : 50 kg
Father’s Name : Vicente J. Imperial
Mother’s Name : Briza J. Imperial

EDUCATIONAL BACKGROUND
Primary Sta. Cruz Elementary School
Olingan Dipolog City
 35

2008 – 2014

Secondary Zamboanga del Norte National High School

Turno Dipolog City, Zamboanga del Norte
2014 – 2020

Tertiary Jose Rizal Memorial State University

Dipolog City, Zamboanga del Norte
2020 – present

CURRICULUM VITAE

JUVELYN G. MACLAT
Address: Kauswagan, Sergio Osmeńa, Zamboanga del Norte
Contact Number: 09124019748
Email Address: maclatjuvelyn@gmail.com
______________________________________________________________________________
PERSONAL INFORMATION:
Date of Birth April 17, 1998
Place of Birth Kauswagan, Sergio Osmeńa, Zamboanga del Norte
Age 25
Gender Female
Civil Status Single
Citizenship Filipino
Religion Roman Catholic
Height 5”3’
Weight 48.1 kg.
Father’s Name Dionesio P. Maclat
Mother’s Name Myrna T. Gumalas

EDUCATIONAL BACKGROUND:
Primary Kauswagan Elementery School
Kauswagan, Sergio Osmeńa, Zamboanga del Norte
2008-2014
Secondary Zamboanga del Norte National High School
 36

Turno, Dipolog City, Zamboanga del Norte

2014-2020
Tertiary Dipolog City Institute Of Technology
Minaog, Dipolog City, Zamboanga del Norte
2020
Jose Rizal Memorial State University
Dipolog City, Zamboanga del Norte
2020 – present