The Effect of Tax Reform for Acceleration and Inclusion (TRAIN) Law on the Operational Performance of Food Franchises and Stalls in Cabugao, Ilocos Sur

Abstract

This research aims to investigate the effect of the Tax Reform for Acceleration and Inclusion Law on small food businesses, specifically franchises and food stalls, in Cabugao, Ilocos Sur. The study focuses on businesses that have been in operation for at least five years, as their longer existence allows for a comprehensive understanding of the effects of the Tax Reform for Acceleration and Inclusion Law on their operations.

Questionnaires were constructed by the researchers to determine the level of operating performance and for the level of effectiveness of Tax Reform for Acceleration and Inclusion Law. The majority of respondents, aged 40-49, are college graduates and have attended 1-3 seminars. Most small business owners have been in operation for over or equal to 10 years and hired 1-3 employees, usually family members. The study found that small business owners do not believe the tax reform has a positive impact on income generation, and the increase in purchasing power has not significantly impacted their business. However, businesses use incentives to optimize their income and have lower personal income tax rates. The increase in operating costs does not lead to cost-saving measures, and marketing expenses do not contribute to profitability. Lastly, in 2018 and 2019, small business owners reported sales above P300,000 and had expenses below P50,000. Over the subsequent years, the pattern varies. Notably, in 2020 and 2021, small business owners reported sales below P50,000 and expenses also below P50,000. In 2022, reported sales between P50,000 and P100,000 and the expenses are below P50,000. Hence, the operating performance of the business encountered no effect on the implementation of Tax Reform for Acceleration and Inclusion Law.