The Effects of Sin Tax to the Buying Behavior of Smokers in Barangay Narra, San Pedro, Laguna, Philippines
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CHAPTER 1
The Problem and Its Background
Introduction
Tobacco smoking or cigarette smoking is the practice of burning cigarette, taking the smoke into the mouth and then releasing it. This practice dates back as early as 5,000 – 3,000 B.C. but was introduced to Eurasia in the late 17th century where it has also been a commonly traded product. The practice received speculations and a lot of criticisms since it was first introduced but it somehow made its way inside the society and became widespread upon the invention of automated cigarette-rolling apparatus.
The tobacco has been first introduced to other countries before reaching the Philippines. The idea of smoking tobacco first came from the Arawak Indians in 1492 that was noticed by Christopher Columbus. Seven years later, Amerigo Vespucci found out that the inhabitants in an island near Venezuela have already been practicing chewing dried leaves.
In 1591, Mexico has already been growing tobacco at an increasing rate. It was believed that the tobacco was introduced by the Spaniards and Portuguese to mainland Europe, East Indies and Asia while they are on an expedition for searching for spices and spreading Christianity.
Cigarette smoking became one of the highly sought after vice in the Philippines because of the affordable price of each stick ranging from seventy-five centavos to 2 pesos each, depending on its brand. The Philippine government came up with an idea of increasing the taxes imposed upon alcoholic beverages and cigarette sticks in order to minimize its harmful effects to human body.
On 02 December 2012, President Benigno S. Aquino III signed into law Republic Act 10351, otherwise known as the “Sin Tax Law” which provides for additional tax on sin products such as alcohols and tobacco products. Prices of liquor and tobacco products increased from 100-200% immediately after the effectivity of the said law. It is expected that the imposition of sin tax would lessen the number of active smokers and hard drinkers in the Philippines.
This paper purposively aims to identify the direct effect of sin tax to the buying behavior of consumers, specifically to those of tobacco products, within the vicinity of Brgy. Narra in San Pedro, Laguna.
Behavioral Beliefs
Attitude Toward the Behavior
Normative Beliefs
Subjective Norm
Perceived Behavioral Control
Control Beliefs
Intention
Behavior
Actual Behavioral Control
Theoretical Framework
This study used the Theory of Planned Behavior (TPB) of Icek Ajzen (1988, 1991) in understanding different factors that change the buying behavior of people. The TPB is a theory which predicts deliberate behavior, because behavior can be deliberative and planned.
Briefly, according to TPB, human action is guided by three kinds of considerations: 1. Behavioral Beliefs 2. Normative Beliefs 3. Control Beliefs
Conceptual Framework
Structured Questionnaire
Interview
Buying Behavior of Smokers in Barangay Narra, San Pedro after the effectivity of sin tax
1. Demographic Profile of Respondents
-Age
-Gender
-Civil Status
-Income Status
-Educational Attainment
2. Sin Tax Input Process Output
The main concept of our study is the buying behavior of smokers in Barangay Narra in San Pedro after the effectivity of sin tax law. It will be derived from the structured questionnaire consisting of their demographic profile and questions related to sin tax. It will also be derived from the interviews along tour progress that is also related directly to sin tax.
Statement of the Problem
The researchers aim to study the Effects of Sin Tax to the Buying Behavior of Smokers in Barangay Narra. The main objective of the research is to know if sin tax has an effect to smokers. Specifically, it attempted to answer the following:
1. What is the demographic profile of respondents in terms of:
a. Age
b. Gender
c. Civil Status
d. Income Status
e. Educational Attainment
2. Does the sin tax affect the buying behavior of consumer in San Pedro Laguna?
3. Does the sin tax serve its purpose of addressing the problems and increasing number of smoker in the Philippines vis-à-vis their locality of San Pedro, Laguna?
Hypothesis of the Study
Ho: Sin tax does not affect the buying behavior of smokers in Barangay Narra, San Pedro.
Ha: Sin tax affects the buying behavior of smokers in Barangay Narra, San Pedro.
Scope and Delimitation of the Study
The scope of this research is limited to the effects of sin tax to the buying behavior of smokers in Brgy. Narra San Pedro, Laguna.
It is limited to the answers of the total of 96 respondents within Brgy. Narra during the 2nd semester of 2013-2014.
Significance of the Study
This research is intended for and will benefit the following:
1. Students– this research will benefit the students regarding information how sin tax affect barangay residents.
2. Professors/Teachers – it will benefit college professors and lower level teachers in their profession as a reference for their discussions and lectures.
3. Cigarette Smokers – it will benefit cigarette smokers by providing them insights and information about sin tax and its actual effect on smokers like them.
4. Cigarette Merchandisers – it will benefit various local cigarette merchandisers (PMPMI and Fortune Tobacco Corporation, Mighty Corporation, and Japan Tobacco International) by informing them the effects of sin tax to their consumers and knowing their consumers’ views about sin tax.
5. Future Researchers – it will also benefit future researchers as a reference, guide, and as a related studies. There may be other researchers in the future that will be emerging on a similar or related topic regarding sin tax and buying behavior of smokers.
Definition of Terms/ Abbreviations Used
The following are terms used in the context of the research:
ASEAN (Association of Southeast Asian Nation) - a political and economic organization of ten countries located in Southeast Asia, which was formed by Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Myanmar, Cambodia, Laos, and Vietnam. Its aims include accelerating economic growth and social progress, cultural development, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully.
Cannabis (Marijuana) - a preparation of the Cannabis plant intended for use as a psychoactive drug and as medicine.
Fiscal Year (Financial or Budget Year) - a period used for calculating annual financial statements in businesses.
Fluctuation - an irregular rising and falling in number or amount.
GDP (Gross Domestic Product) - the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time.
Nominal Price - Estimated price of an item that may bear little or no relation to its market price, and which is quoted to initiate a negotiation or transaction.
PMFTC (PMPMI and Fortune Tobacco Corporation) - is a private Philippine tobacco company from the two united industry—PMPMI and Fortune Tobacco Corporation—that produces cigarettes specifically in the Philippines.
PMPMI (Philip Morris Philippine Manufacturing Industry) - a branch company of Philip Morris International established to handle all aspects of their business in the Philippines, including manufacturing. PMPMI is merged with Fortune Tobacco Company to form the PMFTC.
Prevalence - the proportion of a population found to have a condition (typically a disease or a risk factor such as smoking or seat-belt use).
SEATCA (Southeast Asian Tobacco Control Alliance) - a multi-sectoral alliance established to support ASEAN countries in developing and putting in place effective tobacco control policies.
Sin Tax - a state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. These types of taxes are levied by governments to discourage individuals from partaking in such activities without making the use of the products.
Tanning Bed - is a device that emits ultraviolet radiation to produce a cosmetic tan.
Tax Incidence - is the analysis of the effect of a particular tax on the distribution of economic welfare.
WHO (World Health Organization) - is a specialized agency of the United Nations (UN) that is concerned with international public health.
CHAPTER 2
Review of Related Literature
Local Literature
Despite the passage of the sin tax law, the prices of cigarettes in the Philippines remain among the lowest in Southeast Asia, an anti-smoking group said on September 2, 2013.
Emer Rojas, president of New Vois Association of the Philippines, said the first edition of the Association of Southeast Asian Nations (ASEAN) Tobacco Atlas showed that the country continued to have one of the lowest prices of cigarette products in the region and even in the world.
Rojas, a laryngeal cancer survivor, said that for example, local brand Fortune is pegged at 58 centavos and Marlboro at $1.16 a pack but in Singapore, which is one of the ASEAN countries with good tobacco control policies, a pack of Marlboro is sold at $9.
He said the Philippines had been lagging behind her ASEAN neighbors in terms of tobacco control so that even with the sin tax law approved last year, the price increases were still not enough to catch up with her counterparts in the region.
Rojas also said that we were only able to achieve a tax burden of 53 percent of the retail price. This is still short of the recommended 70-percent tax burden of the World Health Organization (WHO).
So far, only Singapore has complied with the WHO recommendation while Thailand’s tobacco tax rate is at 69 percent, he said.
Released by the Bangkok-based Southeast Asia Tobacco Control Alliance (SEATCA), the ASEAN Tobacco Atlas is the first ever publication that details the tobacco epidemic in the 10-member association. It contains information on smoking prevalence, prices, deaths, health burden, and tobacco control policies, among other things.
Rojas said 10 percent of the world’s tobacco consumers, or 127 million adults, are found in the ASEAN region with the majority in Indonesia (65 million). The Philippines comes in second with 17.3 million smokers.
An estimated 9.25 billion cigarette sticks are consumed by ASEAN smokers on a daily basis, according to SEATCA.
According to the Tobacco Atlas, Filipinos spend an estimated P326.4 million on cigarette products every month. Despite the huge expenditure on cigarettes, the government allots only P11.45 million for tobacco control.
Rojas said that aside from imposing higher taxes on cigarette products, the government should work on getting approval of the graphic health warning law to help curb the country’s tobacco epidemic.
Other concepts to be introduced are the price elasticity of demand, elasticity, which includes inelasticity, unit elasticity and elasticity itself. Firstly, the price elasticity of demand, this is a unit-free measure of the responsiveness of a quantity demanded of a good to a fluctuation in price. Furthermore, inelasticity refers to inelastic demand which is a demand with price elasticity 0 and 1. A good has an inelastic demand when the percentage change in quantity demanded is less than the percentage change in price. A good can also have unit elasticity. This is a demand with a price elasticity of 1 which means that the percentage change in quantity demanded is equal to the percentage change in price. Then there is the elastic demand, now this is a demand with price elasticity greater than 1. Therefore every other thing remains constant. This occurs when the percentage change in quantity demanded exceeds the percentage change in price.
With the price elasticity of demand come perfectly elastic demand and perfectly inelastic demand. Perfectly elastic demand is when its size is infinity which means that the smallest increase possible will cause an infinitely elastic large decrease in quantity demanded and perfectly inelastic demand is when the size is zero, the quantity demanded is the same at any price.
What the elasticity of supply does is to measure how responsive is the quantity supplied subjected to a change in the price of a good when everything else remains the same. Perfectly inelastic supply is when the size is 0;this means that the quantity that is supplied is the same regardless of price. Perfectly elastic supply is when the size is “infinite,” the small increase in price causes an infinite big increase in the quantity supplied.
Tax incidence is the one concept that has a majority part involved with sin taxes. Tax incidence is “the division of the burden of a tax between the buyer and the seller”. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
Now that we gain an understanding of elasticity and tax incidence, it is important to know how the one affects the other. It is the tax incidence that affects elasticity. If the price of cigarettes increase because sin tax has increased, some people would stop smoking because of this and some will stay constant in their smoking because it is a habit and some would just reduce by a small amount. Therefore the person that carries on smoking regardless of the price has a perfectly inelastic demand for that good while the person that reduces smoking has unit elastic demand. With this information we can see that tax incidence does have an effect on elasticity.
Foreign Literature
One of the main purported benefits of sin taxes is that they tend to reduce harmful behaviors. For instance, tobacco use is associated with various health problems such as cancer and heart disease. Imposing high taxes on cigarettes reduces the amount of tobacco consumers can afford, which may in turn reduce the overall negative health impacts of smoking. Other activities with known negative health effects that are taxed include drinking alcohol and using tanning beds.
Another benefit of sin taxes is that they can provide additional tax revenue to the government bodies that impose them. According to the New York Times, 22 states increased their tobacco taxes between January 2009 and April 2010 to bring in more tax revenue. Certain states like California are considering legalizing marijuana as a way to bring in more sin tax revenue. According to Reuters, "the U.S. federal government collected $20.6 billion in taxes on alcohol, tobacco, firearms and ammunition in fiscal year 2009."
Sin taxes can potentially result in reduced economic activity which could reduce the amount of tax revenue they generate. If a gas station has to charge $1 more per pack of cigarettes, they will sell fewer cigarettes and make less profit overall as a result. This can hurt businesses that rely on the sale of products like alcohol and tobacco. If a consumer pays $100 a month due to sin taxes, that is $100 less that he can spend on other goods and services.
Jennifer O’Loughlin found out that the most common factors that encourage students to smoke are cigarette advertisements and smoking by their parents, siblings, and friends.
While discouraging harmful behavior is often cited as one of the aims of sin taxes, it is dubious whether sin taxes are actually effective at discouraging harmful behavior. According to the New York Times, "economists doubt that sin taxes greatly affect the behavior of most Americans." Products such as tobacco and soda are often viewed as basic necessities so consumers continue to buy them, despite incremental increases in cost due to taxes.
The TPB is the successor of the similar Theory of Reasoned Action of Ajzen and Fishbein (1975, 1980). The succession was the result of the discovery that the behavior appeared not to be 100% voluntary and under control, which resulted in the addition of perceived behavioral control. With this addition, the theory was called the Theory of Planned Behavior.
Briefly, according to TPB, human action is guided by three kinds of considerations:
1. Behavioral Beliefs (beliefs about the likely consequences of the behavior) 2. Normative Beliefs (beliefs about the normative expectations of others) 3. Control Beliefs (beliefs about the presence of factors that may facilitate or impede performance of the behavior)
Ajzen’s three considerations are crucial in circumstances/ projects/ programs when changing behavior of people.
In their respective aggregates, behavioral beliefs produce a favorable or unfavorable attitude toward the behavior, normative beliefs result in perceived social pressure or subjective norm, and control beliefs give rise to perceived behavioral control. In combination, attitude toward the behavior, subjective norm, and perception of behavioral control lead to the formation of a behavioral intention. As a general rule, the more favorable the attitude and subjective norm and the greater the perceived control, the stronger should be the person’s intention to perform the behavior in question.
Recently (2002) Ajzen investigated Residual Effects of Past on Later Behavior. He came to the conclusion that this factor indeed exists but cannot be described to habituation as many people think. A review of existing evidence suggests that the residual impact of past behavior is attenuated when measures of intention and behavior are compatible and vanishes when intentions are strong and well-formed, expectations are realistic, and specific plans for intention implementation have been developed.
Local Studies
Total tax rate as a % of Retail Price: 41% Total tax rate as a % of Retail Price | Types of Tax Applied | Tax Base for Domestic Products | Tax Base for Imported Products | Remarks | | Excise Rate | VAT/GST | Import Tariffs | Others | | | | 53% | PHP 12 or 25 per pack (2 tiers), specific tax | 12% | 3% - 10% | N/A | Net Retail Price (before tax) | CIF | Tariffs collected from imported tobacco products vary for different products: unmanufactured tobacco (3 or 7%), the tobacco tax system will shift from 4 tiers to a unitary rate by 2017, reclassify all brands every 2 years (removing the price classification freeze), and increase tax by 4% annually beginning 2018. |
*Country customs department and Ministry of Finance Data 2010-2012
Most popular local brand is Fortune costs 0.47 USD per pack
Most popular foreign brand is Marlboro costs 0.99 USD per pack
Nominal prices of cigarettes in the Philippines have increased over time, but between 2000 and 2010, real prices for the most popular cigarette brands of each price class have actually decreased by 9%, at the minimum, and 18%, at the maximum.
Cigarettes have become more affordable in the Philippines as indicated by the decreasing RIP trend. From 1999 to 2009, the RIP decreased by 27 to 36 percent. Despite the regular excise tax increases, cigarettes have become less expensive and more affordable due to the greater increases in per capita GDP income. This means that cigarette prices have not been catching up with the increase in income, resulting from higher economic growth for the past years.
Foreign Studies
Total tax rate as a % of Retail Price: 69% Total tax rate as a % of Retail Price | Types of Tax Applied | Tax Base for Domestic Products | Tax Base for Imported Products | Remarks | | Excise Rate | VAT/GST | Import Tariffs | Others | | | | 69% | SGD 0.32/stick, specific tax | 7% | N/A | N/A | No Domestic Production | Weight and type of tobacco product | Excise duties are applied on the type of product. For unmanufactured tobacco and cut tobacco an excise duty of SGD 181/kg is applied. An additional SGD 0.32 is applied for each stick weighing more than 1 gram. |
*Country customs department and Ministry of Finance Data 2010-2012
Most popular foreign brand is Marlboro costs 9.31 USD per pack
Singapore has done a good job at reducing daily smoking prevalence among adult by increasing 300% in cigarette prices, averaging a 4% increase in price each year.
`Up to March 2003, excise duty on cigarettes was by weight per kilogram of tobacco. From July 2003, excise duty on cigarettes was revised to a unit-based (per stick) system. This change to a unit-based system was in response to the emergence in 2000 of low-priced cigarettes that had less tobacco content and less weight per cigarette and which, due to their price, were attracting young people to smoke and encouraging smokers to smoke more, as evidenced in a shift in consumer behavior pattern (sales of low-priced cigarettes increased from 6% in 2000 to 25% in (2003).
In late 1920s, German scientists recognized that there is a connection between smoking and lung cancer. This leads to the first anti-smoking campaign in modern history. In 1950, British researchers showed clear evidence in the relationship between smoking and lung cancer which triggered political action against it. However, in 1965, the rates of consumption of cigarettes didn’t decline but continue to climb further in the developing world.
Many smokers begin this practice during early adulthood or preadolescence. Peer pressure is the most common reasons why people try smoking. Due to the desire to respond to the peer pressure, symptoms from initial use (such as nausea, dizziness, interrupted sleep pattern, increased blood pressure and rapid heartbeats) are being endured. Eventually, these unpleasant symptoms vanish over time with repeated use.
Sin taxes are negative externalities which are products like cigarettes and alcohol that are not beneficial to society or a person. Everything we can buy includes a price, a cost and a producer and what their cost is. Also it leads to a concept of demand and supply.
Basically, demand is just a relationship between the quantity of a good that consumers plan to buy and the price of the good when every other influence on a buyers’ plan stay the same. Supply on the other hand is also just a relationship between the quantity of a good that producers, not consumers, plan to sell and not to buy and the price of the good when all other influences on sellers’ plans remain the same. There is a demand and supply for almost any sellable product.
There are different environmental factors that greatly influence the buying behavior of the people, namely: a. Lighting; b. Color Schemes; c. Textures; d. Noise; e. Overcrowding; and f. Relative Cleanliness
The government imposed sin tax on drinkers and smokers in order to address the rampant problems of Filipino vices, i.e. smoking.
CHAPTER 3
Research Methodology
The researcher used the descriptive form of research. The researcher aimed to study the outcome of the imposition of sin tax law to the smokers in Brgy. Narra in San Pedro, Laguna.
Research Design
Our primary data consists of data from the answer to the survey we had given to the residents of Brgy. Narra. It also includes assessment from the interviews that we had acquired by asking them questions while they are answering the questionnaire. It also includes their opinions for and outburst against the situation regarding sin tax and their smoking habits.
Our secondary data is gathered from different resources. Internet is the most useful resource that we used to collect most of our data that had been put in the related literatures and studies and framework. We also got our resource from various books, specifically books about human behavior.
Research Instrument
A questionnaire is a research instrument consisting of a series of questions and other prompts for the purpose of gathering specific information from the respondents. The researcher often uses closed-ended questions to conveniently extract the most valuable data we can get from the residents. The data collected from the respondent has been the primary data for our study.
Population and Sampling
The researchers used quota sampling. In quota sampling, the selection of the sample is made by the interviewer, who has given quotas to fill from specified sub-groups of the population in order to acquire the most feasible information required for the study. In quota sampling, the selection of the sample is non-random. Sample size can be computed as following: n=N1+Ne2 n=19301+1930(0.1)2 n=96
Where:
n = Sample Size
N = Total Population Size e = Marginal Error (10%)
Statistical Treatment
The data obtained from the respondents were tabulated systematically in order to obtain accurate information related to each element of the target population. The statistical treatment of data used to determine the percentage was the percentage formula, as shown below:
p=f ×100n
Where: p = Percentage f = Frequency n = No. of Population
CHAPTER 4
Presentation, Interpretation and Analysis of Data
This chapter shall discuss the findings obtained from the interview and survey used in the study. It shall discuss the characteristics of the respondents, their usage of cigarette, and the effect of sin tax in their buying behavior. In order to simplify the discussions, the researcher provided tables and graphs that summarize the collective reactions of the respondents.
Characteristics of the Respondents
All tables under Table 4.1.1 are presentation of the Demographic Profile of the Respondents
Table 4.1.1 Gender of Respondents Gender | Frequency | Percentage | Male | 79 | 82.3 | Female | 17 | 17.7 | Total | 96 | 100 |
Table 4.1.1 shows the gender of the respondents where 82.3% of the total respondents are male while 17.7% are female.
According to WHO, worldwide it is estimated that men smoke nearly five times as much as women, but the ratios of female-to-male smoking prevalence rates vary dramatically across countries. In China, 61% of men are reported to be current smokers, compared with only 4.2% of women.
Table 4.1.2 shows the age of the respondents where 28.1% of the total respondents are around 36-45. Also, 24% are 16-25, 17.7% are 26-35, 15.6% are 46-55, and 13.6% are 56-65.
According to the Statistics Canada created by the Government of Canada, people aged 45 – 64 are the most current number of smokers.
Table 4.1.3 Monthly Income of Respondents Monthly Income | Frequency | Percentage | 4,000 and below | 58 | 57.6 | 4,001 – 8,000 | 26 | 26.9 | 8,001 – 12,000 | 8 | 7.7 | 12,001 and above | 4 | 3.8 | Total | 96 | 100 |
Table 4.1.3 shows the monthly income of the respondents where 57.6% of the total respondents earned 4,000 and below. Also, 26.9% earned 4,001-8,000, 7.7% earned 8,001-12,000 and 3.8% earned 12,001 and above.
According to Maine Department of Health and Human Services, low income people smoke more, suffer more, spend more, and die more from tobacco use.
Table 4.1.4 Civil Status of Respondents Civil Status | Frequency | Percentage | Single | 56 | 58.3 | Married | 40 | 41.7 | Total | 96 | 100 |
Table 4.1.4 shows the civil status of the respondents where 58.3% of the total respondents are single while 41.7% are married.
According to the Guardian News and Media Limited, 27% of singletons smoke, compared to just 14% of married people - and those trends are consistent across every age group.
Table 4.1.5 Educational Background of the Respondents Educational Attainment | Frequency | Percentage | College Graduate | 15 | 15.6 | Undergrad | 8 | 8.3 | High School | 49 | 51.1 | Elementary | 12 | 12.5 | Unschooled | 12 | 12.5 | Total | 96 | 100 |
Table 4.1.5 shows the educational attainment of the respondents where 51.1% of the total respondents only finished High School, 15.6% are College Graduate, 12.5% are Elementary, 12.5% do not enter school and 8.3% are Undergraduate.
According to U.S Centers for Disease Control and Prevention, 25.5 percent of adults who do not graduate from high school smoke, compared to just 9.3 percentof those with a college education and 5 percent of those with a graduate degree.
All tables under Table 4.2.1 are presentation of the buying behavior of the respondents before the implementation of Sin Tax
Table 4.2.1a No. of Days in a Week (Usage)
No. of Days in a Week (Usage) | Frequency | Percentage | Everyday | 86 | 89.6 | 5-4 times a week | 4 | 4.2 | 3-2 times a week | 4 | 4.2 | Once a week | 2 | 2.0 | Total | 96 | 100 |
Table 4.2.1a shows the number of days the respondents consume cigarette in a week before the implementation of sin tax where 89.6% of the total respondents smoke every day, 4.2% consume 5-4 times in a week, 4.2% consumes 3-2 times in a week and only 2% consumes once a week.
Table 4.2.1b shows the brand preferred by the respondents before the implementation of sin tax where 43.8% of the total respondents use Marlboro, 19.8% uses Fortune, 19.8% uses other brands, 12.4% uses Hope and 4.2% uses Mighty.
Table 4.2.1c shows the amount of sticks the respondents can consume in a day before the implementation of sin tax where 53.1% of the total respondents consume 7-12 sticks in a day, 26% consumes 1-6 sticks a day, 12.5% consumes 19-24 sticks, 4.2% consumes 13-18 sticks and 4.2% consumes 25-30 sticks in a day.
All tables under Table 2.2 are presentation of the buying behavior of the respondents after the implementation of Sin Tax
Table 4.2.2a No. of Days in a Week (Usage) No. of Days in a Week (Usage) | Frequency | Percentage | Everyday | 74 | 77.1 | 5-4 times a week | 6 | 6.2 | 3-2 times a week | 4 | 4.2 | Once a week | 12 | 12.5 | Total | 96 | 100 |
Table 4.2.2a shows the number of days the respondents consume cigarette in a week after the implementation of sin tax where 77.1% of the total respondents smoke every day, 12.5% consume once a week, 6.2% consumes 5-4 times in a week and only 4.2% consumes 3-2 times in a week.
Table 4.2.2b shows the brand preferred by the respondents after the implementation of sin tax where 36.5% of the total respondents use Mighty, 28.1% uses Marlboro, 23.9% uses Fortune, 12.5% uses other brands and no one uses Hope.
Table 4.2.2c No. of Sticks per Day No. of Sticks per Day | Frequency | Percentage | 1 – 6 | 28 | 29.2 | 7 – 12 | 41 | 42.7 | 13 – 18 | 13 | 13.5 | 19 – 24 | 14 | 14.6 | 25 – 30 | 0 | 0 | Total | 96 | 100 |
Table 4.2.2c shows the amount of sticks the respondents can consume in a day after the implementation of sin tax where42.7% of the total respondents consume 7-12 sticks in a day, 29.2% consumes 1-6 sticks a day, 14.6% consumes 19-24 sticks, 13.5% consumes 13-18 sticks and 0% consumes 25-30 sticks in a day.
All tables under Table 3 are presentation of the shift in the buying behavior of the respondents between “before” and “after” the implementation of Sin Tax
Table 4.3.1 Respondents (Effect of Sin Tax) Respondents | Frequency | Percentage | Affected | 46 | 47.9 | Unaffected | 50 | 52.1 | Total | 96 | 100 |
Table 4.3.1 shows the respondents affected or unaffected by the effect of sin tax to their buying behavior where 52.1% of the total respondents are unaffected while 47.9% are affected.
Table 4.3.2 Affected Respondents (shift in different aspects) Affected Respondents(shift in) | Frequency | Percentage | Brand | 35 | 76.1 | No. of Sticks | 19 | 41.3 | Interval of Usage | 15 | 32.6 |
Table 4.3.2 shows the shift in buying behavior of the respondents based on different aspect after the implementation of sin tax where 76.1% of the 46 affected respondents admitted a shift in brand they use, 41.3% admitted shift to the amount of sticks they consume in a day and 32.6% admitted a shift in the intervals of days they consume cigarette.
All tables under Table 4 are presentation of other attributes pertaining to the smokers’ buying behavior and the sin tax
Table 4.4.1If price is doubled, will you still buy? | Frequency | Percentage | Yes | 61 | 63.5 | No | 35 | 36.5 | Total | 96 | 100 |
Table 4.4.1 shows the number of respondents that will still buy cigarettes even if the price is doubled where 63.5% of the respondents answered “Yes” and 36.5% answered “No”.
Table 4.4.2 Are you in favor of Sin Tax? | Frequency | Percentage | Yes | 51 | 53.1 | No | 45 | 46.9 | Total | 96 | 100 |
Table 4.4.2 shows the number of respondents who are in favor of sin tax where 53.1% of the total respondents answered “Yes” while 46.9% answered “No”.
CHAPTER 5
Summary of Findings, Conclusion and Recommendation
This chapter presents the summary of findings, conclusions drawn from the study, and recommendation for future research.
This study was intended to know the effects of sin tax to the buying behavior of smokers in Barangay Narra, San Pedro. In order to answer this research question, a correlation research study was applied. Through quantitative and qualitative approaches, the researchers developed a questionnaire that would gather pertinent data. Literatures to support findings were also integrated. The researchers used quota sampling technique to get specific samples in the population of resident smokers.
Findings
1. Effectiveness of sin tax to lessen the population of smokers
Majority of the respondents (52.1%) are unaffected by the implication of sin tax to cigarettes. As this is the case, we had accepted our Null Hypothesis (Ho) which states: Sin tax does not affect the buying behavior of smokers in Barangay Narra, San Pedro.
2. Probability that consumers will still buy cigarette even at a higher price
We had analyzed that 63.5% of the respondents would still buy cigarettes even if the government imposed a larger increase in sin tax. 3. Shift in the smokers’ smoking habits
In our study, 76.1% out of 24 affected respondents admitted a shift from their usual brand to a cheaper brand. Interviews from the residents give us a conclusion that majority of them reverted to Mighty cigarette for it is the most affordable cigarette they can buy. Also, 41.3% out of 24 affected respondents also admitted a change to a lesser amount of cigarette sticks they consume in a day while 32.6% of them changed to a fewer interval of days they smoke.
Conclusion
Based on the findings gathered from the researchers’ surveys, the researchers conclude that sin tax does not have an effect to the buying behavior of smokers in Barangay Narra. Knowing the fact that smokers will still buy the product at a higher cost, and there only exist a very small portion of the population who are affected by the implication of sin tax, it defines that sin tax is not as effective as anyone expected.
Barangay Narra is under “Anti-Smoking Policy”, yet its residents, although aware, are still selling and buying cigarettes. The Sin Tax Law and the Anti-Smoking Policy enforced within San Pedro, Laguna are still being ignored by most of the population. This may be due to their perception regarding sin tax that no one will benefit in the imposed sin tax.
Some residents knew that the purpose of sin tax is to lessen smokers and to add the collected tax to the fund of Universal Health Care Program. But due to their mistrust to the government labeling it as corrupt, they mind little to where the tax will actually be used.
Recommendation
Based on the problems discovered by this study, it is recommended that:
1. The Government and Barangays should be holding an anti-smoking campaign around the barangay and the barangay officials should act as a role model for the residents.
2. The government should use an effective media—television, radio and newspaper—to inform the public about the important details and information regarding sin tax. Whatever bill or law they are going to implement, they should constantly be checking on the company and ensure that the law is being implemented to prevent people from gaining distrust through empty promises.
3. The government must also focus on other more important matters that needed solution. This includes problems that must be addressed firsthand such as education, agriculture, health care services, employment, and housing. This would add to the credibility of the government’s actions and decisions.
