HOUSEHOLD INCOME AND SATISFACTION LEVEL OF TAXPAYERS ON
GOVERNMENT PROGRAMS: A CORRELATION STUDY
An Undergraduate Thesis
Presented to the Faculty of the
College of Accounting Education
Franzine Celina Magallanes
Veramae O. Macasaet
Shaina A. Palalisan
Taxes had always been a burden to the people because of the materiality of its amount. Filipino families’ average annual household income is approximately P267,000 which is considered as the middle class. According to a survey conducted by the Filipino Card Survey, there was a high degree of dissatisfaction towards the public services. The purpose of this study is to determine the relationship between the average net household income and the satisfaction level of the taxpayers on the government programs. This study used correlation design as it will determine the relationship between two or more variables. The researchers used the interval rating scale to interpret the level of satisfaction of the taxpayer towards government programs and household income. The researchers used the Pearson-r correlation to generate if there is a significant relationship. According to the results above, there is no significant relationship between the household income and the satisfaction level of taxpayers on the government programs. There is insufficient evidence that the null hypothesis is rejected since the p-values of the government programs exceeded the 0.05 level of significance.
Keywords: Taxation, household income, satisfaction, government programs, quantitative, correlation, Pearson-r
Rationale of the study
When asked by tax, people would normally connote it to the word burden. Even if there’s a positive comment, the negative connotation still exceeds the former. Taxation is a mandatory contribution placed upon the people by the government to serve as its revenue (Chodorov, 2017). And accordingly, one theory that stands the concept of taxation is The Benefit Principle, which states that everyone should be taxed in correspondence to the benefits that they will receive from the governments and the taxes that they will pay (Valencia & Roxas, 2013).
The Family Income and Expenditure Survey (FIES) was used to measure the level and difference in income of the Filipino families in each region. With the income class ranking from (under P40,000) to (P250,000 and over), the survey had revealed that Filipino families’ average annual household income is approximately P267,000 (with an average savings of P52,000) which was part of the middle class based on Birdsall’s classification (Bersales, 2016). However, with the increase of income, the tax rate imposed also follows. As a matter of fact, 20 percent of the tax revenue came from the collection of this tax (Quimbo, 2014). And an individual pay more than 6 percent of the average tax rate in the Asia Pacific (Mendez, 2015).
But with the outdated tax bracket, the lower class under P40,000 per annual income bracket were already taxed by 10 percent-15 percent. If it was converted into monthly income, it will only be around P800-P2,500 a month, a bit below than the poverty threshold that was set by the government. And a family needed an estimated monthly income of P9,140 to meet its basic needs as of 2015 (Jiao, 2016). Furthermore, 46.7 percent of the household income depends solely on the salaries/wages of a member, leaving the 53.3 percent on the combined entrepreneurial activities and other income of the family (Philippine Statistics Authority, 2012). With these issues arising from paying income taxes, there were several discussions that was mentioned to lower the income tax rates. Among them were the bill that was promoted by Paolo Benigno “Bam” Aquino, which to adjust the tax bracket, lower the tax rate and exempt the Marginal Income Earners (not over P60,000) with automatic indication to inflation every 6 years (Quimbo, 2014).
Per World Bank (2015), with its collaboration with the Social Weather Stations, they conducted the Filipino Card Survey which aims to reveal the opinions and voices of the less-fortunate. According to the study, the report card shows a high degree of dissatisfaction towards the public services, such as, the seldom use of health facilities of those poor who are sick than those with higher income. Although 19.3 percent of the GDP were allocated by the NGO to the government services: 1.2 percent for Peace and Order, and 5.1 percent for total Social Services (Manasan, 2016), the overall national poverty statistics remain depressing. An estimate of 32 percent of children under age five suffer from malnutrition, according to UNICEF, and 60 percent of Filipinos die without experiencing help from a healthcare professional.
Moreover, over the half year in 2012, a new report from the National Statistical Coordination Board found no statistical improvement in national poverty levels since 2006 (Keenan, 2013). Although in the latest Social Weather Stations (SWS) survey, it showed that in the administration of former President Aquino received satisfactory rating for the last quarter of 2015. Among its specific issues, the administration received the highest rating for helping the poor. Though, the majority were neutral when rating the issues on fighting crimes, eradicating corruption and rehabilitation of areas that was damaged by conflicts (Santos, 2016).
Most of the previous studies were only focused on the satisfaction of the taxpayers on the government services. In attest to that are the studies “Happiness and Public Expenditure: Evidence from a panel analysis.”, (Kasmaoui & Bourhaba, 2017); “Income, Taxes and Happiness” (Akay et al., 2012); and “Citizen satisfaction with public goods and government services in the global urban south: A case study of Cali, Colombia” (Martinez et al., 2015). With these serve as a guide, the researchers have come into terms to focus not only on the satisfaction of the government programs but also in its relation in the movement of the household income. Thus, the researchers will aim to study the correlation between the household income and the satisfaction of the taxpayers on the government programs in Davao City.
Objectives of the Study
This study will determine household income and satisfaction level of taxpayers on government programs.
Specifically, this study will be conducted to accomplish the following objectives:
To determine the average net household income of the respondents.
To determine the level of satisfaction of taxpayers on the benefits received from government in terms of:
2.1 Peace and Security
2.2 Social Welfare
2.3 Good Governance and Sound Fiscal Management
3. To determine if there is a significant relationship between average net household income and taxpayers’ satisfaction on the government programs.
Statement of Hypothesis
Ho: There is no significant relationship between average net household and satisfaction level of taxpayers on the government programs.
Significance of the Study
This study will provide information about the average net household income and the level of satisfaction of taxpayers on the benefits received in Davao City. And the following are the ones who can benefit from this study:
Taxpayers. Accomplishing this study will help them know how will the government use their tax payments.
Local Government. This research will benefit the local government by letting them know the effect of satisfaction of the taxpayers in the movement of their income.
CAE Future Researchers. This study will help them for their future researches regarding where the individual taxpayers are most satisfied on government programs and its effect on their household income.
Definition of terms
The following operational definitions were used in this study:
Average Net Household Income is the combine income of one or more people sharing a particular place of residence less their expenditures divided by the total number of member contributed.
Government Programs are the plans and projects of the government to serve the nation.
Correlation is the term used to find out the relationship between household income and satisfaction level of taxpayers on government programs.
Taxpayers are the ones who earn money and pays taxes to the government.
Satisfaction is the term used to know if the government programs meet the expectation of the taxpayers.
Review of Related Literature
This chapter will present the different insights from different sources, which have bearings in the study. The gathered sources will provide the necessary facts, information, ideas, views and significant studies that are related to the research problem and can direct to the improvement of the intended study.
Average Net Household Income. The disposable income or net household income is the remaining cash held after mandatory contributions and taxes are made. It is a good indicator of standard of living, as it only includes the disposable income and expenses shared by people that are part of the household (Grimsley, 2017). Mean/Average household income is calculated by dividing total household income by the total number of household (McCallum, 2011). There are studies in the U.S showed that several self-employed individuals are underreporting their income to tax authorities. Income underreporting is incidental from consumption predispositions (Paulus, 2015). It was discovered that in the household survey conducted by the U.S. authority, they failed to report the right amount on their income and expenses by 25 percent. Thus, resulting to a biased interpretation when used as referenced in different situations (Hurst et al., 2014) and would lead much tax revenue loss from incorrect reporting of employment income since it only accounts for a least share of an individual’s overall earnings (Paulus, 2015).
In the Philippines, the yearly average savings of a family is amounted to P52,000 as stated in the Family Income and Expenditure Survey (FIES). The families were sorted out corresponding to their per capita income decile. From 2012 to 2015, an average annual family income ranges from P86,000 represents the families in the lowest decile and the highest range at 786,000 (Bersales, 2016). In the Philippines, a research found that 3 from 20 households are middle class, which two thirds living in urban areas (Adrian, 2017). 35 percent were calculated as middle class residing in urban areas while 10-12 percent settled in rural areas. The distribution of the family class through major island groups emphasizes the difference in the development of the country (Virola et al., 2013). According to Amoranto et al. (2010), a higher class status is essentially correlated with values that would nurture economic growth. It needed an active and constitutionally vocal middle class individuals to assess the government’s behavior. This will help create a society that will raise class status through education and have better jobs.
Household Income. The combination of the income of all the members residing in one place is called a household income. It does not need to be a family, being related is not a relevant information because the important fact for it to be called a household income is if they are residing in one house. Even the income of a person living alone is called a household income (Meteor, 2017). An income refers not only to salaries and benefits but also to the receipt of any personal business, investments, dividends and other sources of income (Garosi, 2015). In fact, household income is an essential factor in policy and decision-making of the state. With the income distribution, it aids the government on its policies and programs such as taxes, benefits, and social insurance programs (Villejo et al., 2014). In the Philippines, there is a total of 22,975,630 number of household that exists with Davao City having 409,951. And each household comprises 4 individuals which some are generating income (PSA, 2016).
There are some influential factors which affects the income of an individual brought about by the kind of job available to him. The curbs on job employment happen because of the prevailing unfairness on job employment. This occurs when a job applicant or employee is treated differently from others because he might be black, a Muslim, old, blind on one eye, gay, etc. (Doyle, 2017). Yet, many studies have pointed out that bias on these factors may be part of the reason on wage difference. For an instance, the height, as a human capital, make a difference in labor productivity thus prone to discriminatory factor because tallness is somehow associated with strength and success (Wang ; Shen, 2016). Discriminations in the workplace because of being a woman is still alarming in the Philippines with 76 percent of respondents, which are working women claiming to still, experience it (Saulon, 2017). The study showed that amongst the 900 female respondents, 18 percent say their bosses look down on them, 39 percent of them say they were passed up on promotion, 16 percent complains about being called names like “bossy” (Singson, 2017). And to reduce this, the government should take pretty measures, such as establishing law against discrimination. Whereas, according to the study, at ages 49 (male) and 44 (female), their worked income is at its peak (Wang ; Shen, 2016).
In the study of Lhing, Nanseki and Takeuchi (2013) on their Analysis of Factors Influencing Household Income: A Case Study of PACT Microfinance in Kyaukpadaung Township of Myanmar, aside from the gender, age, and height, the most leading factor is the educational level. There is a positive connection between earnings and educational level (Diep, 2015). The greater the educational level, the greater income can be generated and the slimmer chance of instability during recession period (Carlson ; McChesney, 2014). For example, in the United States, people with professional degrees earned six times more than those who have not finish college or did not graduate in high school. Aside from that, there is also a relative effect of educational attainment on unemployment rate (Klarsfeld, 2016). Those attaining high school education or below has the lowest unemployment rate with 7 percent -15 percent whereas those who are a degree holder only reach 4-5 percent- 9 percent unemployment rate (Strauss, 2012). Educational attainment is correlated with different factors that may decrease the occurrence of unemployment but does not imply the cause of it. In a 1991 study, it has shown the relationship between education and unemployment. And it has stated that education does diminish unemployment because there is a lower chance of getting laid off if you are more educated and will be more likely to be hired once fired (Michael, 2013). Because of this, in the latest survey, it appeared that 70 percent of high school students reacted to this result and therefore get themselves to enroll in college (Strauss, 2012).
However, according to Habacon (2014), higher educational attainment does not guarantee social advancement based on numerous reports of unemployment among degree holders in the Philippines. From 41 percent in 2009, the unemployment rate among college graduates increased to 42.5 percent in 2011 compared to the elementary graduates who only reached 13 percent. It is because the highest rating of workforce belongs to the sector of laborers and unskilled workers with 32.6 percent compared to Professionals (4.7 percent). As stated by Yuen (2010), a research in Canada, the over-education is a great factor in job-education mismatch. Individuals with a higher educational attainment than the requirement for the job applying were considered as being overqualified. Also, the specialty of each profession also affects the unemployment or mismatched of the submitted job (Kulkarni et al., 2015). Only 64.9 percent of graduates attested that their job matched their education whereas the rest said that it was somehow or not at all related. This is due to the fact that specific skills required special trainings. In the Philippines, mismatch exists because of the issue on lower wages. New graduates are faced with low entry-level minimum wage (Jaymalin, 2017). 5 out of 8 profession tend to pursue unrelated occupations in order to earn higher wages. In addition to that, the place also influences the decision of an applicant. They typically prefer to live and work in the rural areas because of greater opportunities and infrastructure and it causes unemployment and underemployment in urban areas (Jasa et al., 2013).
Household Consumption. Household consumption consists of expenditure by a household member on goods or services that is for the satisfaction of their needs or wants. It includes the share of expenses on health, education, and housing rent (National Institute of Statistics and Economic Studies, 2016). For a sole breadwinner, the obligation to pay for bills, family’s daily needs, school fees and unexpected expenditures like sickness, injury or disability (Matusiak, 2013). According to a study, the most expenditure is spent on food, education, and housing. In 2015 latest FIES, the Filipino families’ expenditure was spent mainly on food (41.9 percent). And families below average has higher percentage (59.7 percent) than the above average families (38.8 percent) (Bersales, 2016). Moreover, younger individuals and married people consume more than the rest. The household structure, however does not affect the consumption behavior of a household (Katsaiti et al., 2017). But according to Adrian (2017), a strong middle class is a key factor to improve the economy of a nation.
Benefits from Tax. Paying the right amount of tax is a social responsibility of the inhabitants in the country. The taxes that were paid will go to the government funds and will be used to run, develop, and improve the government facilities and the lifestyle of the citizens, inside and outside the country (Yanuaria, 2013). In addition to that, twenty percent (20 percent) of the half of the national taxes that was collected will be accrued to the city or municipality in accordance to the Local Government Code of 1991 (Bureau of Internal Revenue, 2017).
Every local government unit shall exercise the powers necessary to effectively and efficiently govern for the benefit of the general welfare (Donato, 2016). Moreover, Maes et al. (2013) stated that the local government shall ensure and support the preservation and enrichment of culture, promote health and safety, enhance the right of people to a balanced ecology; improve public morals, enhance economic prosperity and social justice, promote full employment among their citizens, maintain peace and order, and preserve the comfort and convenience of the population (Bueza, 2014).
Peace and Security. The concept of peace and security has a lot of definitions, though peace commonly talks about the absence of aggression, (direct) violence, and of massive killing of different races as defined in the military means. However, in reality, it is not restricted to violence alone. According to the study of Tilahun (2015), peace is subdivided into two typologies as stated by Johann Galtung, a prominent founder of peace thinking. He stated that there is negative and positive peace. Negative peace is the absence of violence (Knox, 2011), the act of reducing malice or backstabbing (Lenski, 2012). Whereas positive peace is the presence of social justice and equality, and the absence of structural (indirect) violence (Knox, 2011) or simply, the harmonious social relations of the human society, the restoration of relationship, creation of family and organizational systems (Lenski, 2012). To achieve peace in both, efforts to be emphasized in attaining negative peace includes managing interpersonal and organizational conflict to control, reduce actual and potential violence (Vallejo, 2012), and to reduce the occurrence of war such as cease-fire agreement and having peacekeepers for conflicting parties (Osborn, 2013). On the other hand, positive peace shall be attained only through world order by eliminating the cause of war, violence, and injustice and those attempts to build a society that reflects these commitments (Herath, 2016).
However, it is not easy to achieve the ideal peace. In the study of Jing et al. (2017), the subjective perception of negative outcome interdependence became a vital psychological factor that triggers power conflict. From their experiments, the negative perception towards great power interdependence promote preemptive strikes against citizens from other countries. Fear fueled the defense aggression (Halevy, 2017). The bilateral competition appears to increase the expectation of outgroup aggression that creates psychological foundation for intergroup aggression to defend themselves (De Dreu et al., 2016). Like how Americans, Chinese and Japanese view each other with suspicion because they were taught to hold prejudiced feelings toward each other. But the conflict is not just limited between countries. The war in Syria which originally started as a peaceful call for freedom by the citizen to their dictator and later escalates as their government responds violently against its citizen through heavy weapons and tanks (Sinjab, 2013). This lead to a rebellion not only towards their leader but at the same time a war between divisions mixed with outside alliances (Rodgers et al., 2016). Due to the complexity of the war, negotiations must take into account the outside problems (inclusion of the IS, and regional issues) after compelling the Syrians to come into terms with each other. Calling for peace would also need forceful act from the international community to rid of the possibility of the terrorist groups to rule as war lords (Habets, 2016).
Conversely, the understanding of security depends on the development of the concept of positive peace. It cannot be considered singular in concept definition, since the term definition is dependent on applied context (Brooks, 2010). Security is always related to individual or societal value systems as acknowledged by (Schäfer, 2013) which parted the human security to national security. Human security thinks about not only the military, police, financial security but the security of all basic values for all the people or community (Gasrer, 2014). This includes all aspects of human rights including the need to meet the basic needs and demands of the political and social freedom – freedom from “fear” and “want” such as chronic threats: hunger, disease and repression, and protections from hurtful disruptions of daily life: violent conflict, crimes, child abuse and drug abuse (Fukuda-Parr ; Messineo, 2012).In the Philippines, kidnappings, bank heists, robbery and murder in the countryside have remained the biggest threat for public safety and security among the people (Aquino et al., 2016). According to Azizan et al. (2016), criminals became more violent and frequent in carrying out their schemes. For instance, in Malaysia, crime rates were increasing from day to day which could be classified into violent (crimes on person) and property crimes (Ghani, 2017). The violent crimes pertain to rape, robbery, and murder whereas; property crimes include car theft and burglary. Their study focuses on women who use public transportation.
Based on the survey results, many commuters of KTM Komuter which is a crime victim reached 46.2percent, almost half and the most common type of crime witnessed was pick pocketing (23.1percent) followed by sexual harassment (14.6 percent). This is due to the fact that most of the passengers were not aware of their belongings during peak hours (Azizan et al., 2016). In the Philippines, there are news and articles about thefts in transportation vehicles such as jeepneys and buses. As stated by Macanas (2015), one modus operandi of these snatchers include the spitting of saliva and wiping ketchup on the victim’s bag and clothes unknowingly and will try to trick the person into helping them wipe the stain, distracting them with fake concern while slowly snatching their valuables. Other instances, when being caught in act, confronting a robbery is not the best option for your safety (Nicasio, 2017). Putting up a fight would only heighten the risk of getting harmed especially if the perpetrator is armed (Pretorius, 2016). Thus, leaving them no choice but to give in for their fear of being harm (Fabie, 2013). In addition, harassment especially in women were also present. With the current society, wearing revealing clothing makes one vulnerable to perverts. But for Stephanie Shi of Cosmopolitan Philippines, one’s clothing preference does not have anything to do with being harassed – you could look however you want and still be a victim. Experiences includes elbowing on chests, or butt groping (Serran, 2016). Meanwhile, the crime rate in England and Wales, measured using the British Crime Survey (BSC) was stated that an average person aged 16 and above was a victim of robbery and assault once in every country. Accordingly, a total of 2,203,000 or 23percent of the crime offences were from violence alone, followed by theft (Maguire, 2012). In fact, as reported in Philippine Statistics Authority (2016), in the Philippines, a record of 258,444 crimes in 2014 was recorded against individuals and 231,048 for crimes against property which composed mainly of physical injury (48percent), followed by theft (37percent).
According to the Philippine National Police, the most common crimes that were reported in 2015 were theft, physical assault and robbery mostly of individuals using stolen cabs. There were 352,321 index crimes under the first six months of 2015 – 7,245 cases of murder, 182,886 of physical injury, 5,069 rape cases (Felipe, 2015). There are also reports of increase in traffic accidents across the country. In 2015, there are a total of 24,565 accidents which 1,040 were recorded deaths (Ranel, 2016). The first six months in 2016 has a list of 10,656 with 549 deaths. 99.95 percent of the said accidents were caused by undisciplined motorists, such as over speeding, drunk driving, and using of mobile phones on road (Umali, 2016). These road accidents have been alarming to the road safety rules and regulations and lawmakers were crafting proposals to improve road safety rules (Gonzales ; Banzon, 2017). The suggested resolution addressed the need of appropriate information drives regarding courtesy, discipline and obedience to the law (Ager, 2016). However, the PNP responded that they are limited in capacity to assist victims of crime and traffic accidents due to their lack of equipment, response vehicles and other essentials (Overseas Security Advisory Council, 2016). Yet, the Presidential Communications Secretary Martin Andanar (2016) said that the Philippines is now safer from theft, robbery, physical injury and rape. Moreover, in their reported index crime, it showed that crime rate went down to 31.67percent in July-November 2016 period compared to prior year. In the year 2017, the crime rate had a significant decrease compared to prior years under the Duterte administration (Vallarta, 2017). An estimate of 49.69 percent decrease has been reported from July last year to March this year. Cases of theft, dropped from 66,542 to 27,535, robbery from 27,288 to 12,364 and lastly, car napping incidents decreased from 12,095 to 4,753 (Dalizon, 2017). In fact, 82 percent from Metro Manila responded that they feel safer because of the much-criticized war on drugs campaign (De Jesus, 2017).
It was believed that the police were the first line of defense against crime. A study shows that the most characteristic trait of a police is providing of safety and protection (Rus et al., 2013). To control the crime according to the Senate of the Philippines (2013), the PNP has targeted a 1:700 police-to-population ratio in 2010. In addition, there were Acts filed to decrease crime by giving out stiffer penalties and installment of CCTVs in different establishments to assist the police (Chiu, 2013). From the study of Azizan et al. (2016), recommendations from their respondents include the increase of manpower/guards, CCTVs (Welsh ; Farrington, 2011) and media campaign on self-awareness for safety and security (Hester, 2015). Especially for the foreign tourists who are positively associated with robbery and theft as they are linked to more material possessions compared to Filipino tourists (Palanca-Tan et al., 2015). Increasing the number of Oplan Bakal operations (spot checks of illegal firearms and weapons), beat patrols, Oplan Bulabog (random inspections on community to flush out criminals), Oplan Katok significantly reduce the number of robbery and theft cases, while increase of police checkpoints and mobile patrols reduce the incidence of car napping (Lucagbo et al., 2015).
Social Welfare. Social welfare expenditure as defined is the provision by the public (private) benefit institutions targeting the households and individuals to provide support during situations which greatly affects their welfare. It includes expenses related to family support programs, pensions, healthcare, housing, unemployment benefits, active labor market programs (continuing employment and helping the unemployed) and differently-abled people (Stuckler, Basu ; McKee, 2010). The Official Gazette (2017) stated that the primary agency run by the government, in the Philippines, that is responsible for the social welfare and development of Filipino citizens is the Department of Social Welfare and Development (DSWD). Social welfare agencies have different names, and concepts that are a bit similar all over the globe, but, are there with the same reason which makes it hard to compare programs from different countries (Brown, 2016) also because of the fact that every welfare system is supported by a value system which provides a basis on decision making: who gets what kind of welfare support, how long will it be provided, and on what condition shall it be granted (Dixon ; Macarov, 2016).
According to Fernandez and Olfindo (2011), one of welfare programs in the Philippines is the “Pantawid Pamilyang Pilipino Program” or commonly known as the 4Ps. It is a cash transfer program in the Philippines under the Department of Social Welfare and Development. Here, poor households are given cash grants, provided, that they meet certain requirements set by the government (Montilla et al., 2015). Gebregziabher and Niño-Zarazua (2014) on their study on the impact of government expenditures on the social sectors (education, health and social security) on aggregate welfare (Inequality-adjusted Human Development Index and child mortality), showed that social spending is a great factor on the improvement of the aggregate welfare or the standard of living even in countries with less-advanced democratic institutions. Another study founded out that health expenditures could be a very important element in increasing human capital (Piabuo ; Tieguhong, 2017).
Furthermore, Kasmaoui and Bourhaba (2017), demonstrate the link between public spending and happiness. Public expenditures play a significant role in the increase of happiness through regulation of the market to strengthen social harmony and increase the level of happiness by building infrastructures, setting up a good education system or through promotion of health care services (Farley ; Malghan, 2016). An economist from the University of South California, Richard Easterlin says that yes, there is a certain period where happiness would increase alongside income, but this is not a long-term effect (Jha, 2010). Since higher income is not what really makes people happy, the more personal things like one’s health, family and friends are said to be the ones that make someone happy (Wu, 2010).
Good Governance and Sound Fiscal Management. Acknowledged participation of the public in law making, transparency, and accountability is what makes a good governance (Johnston, 2016). A parliament that could be efficient, effective, and has the ability to be tough is required to exist as it would play a very important role (Adejumobi, 2013). A responsible governance may not promptly reduce poverty, but it can create a background for the empowerment of the poor. By empowerment means that it will allow the poor to reorganize their lives, tap possibilities available within the state and participate in its development (Ghirmai, 2011). Sound fiscal management is the proper usage of taxes, attaining this state will give the best way into using the taxpayers’ money and will enable better handling of economic crises (Milorad, 2011). Failure into doing so will result in dissemination of wrong information or no information at all and unsound decisions that might lead to risks (Financial Growth Solutions UK, 2014).
A survey conducted by the Association of Government Accounts (2010) entitled “Public Attitudes Toward Government Accountability and Transparency 2010” revealed the public to be very unsatisfied and distrustful toward the government regarding its spending activities. This resulted in a 67percent gap between what was expected by the public and what was actually given by the government (Haskins, 2010). The same case with the Malaysia and China being in the highest level in terms of bribery and corruption cases as surveyed on the Asia Pacific Fraud Survey Report Series 2013 (Khalid et. al, 2016). Furthermore, in the assessment of the good governance in the land administration in Shambu town in Ethipoia, shows that 80.6percent of the respondents confirmed that the level of the resident’s participation in decision making is very low. It shows that their municipality does not consider their residents’ opinion regarding their policies on land (Tessema et al., 2016). What happened last 2011 in Wisconsin would be a good example for this, the Act 10, also called as the Budget Repair Bill by the Wisconsin Governor Scott Walker, was passed despite days of protests from tens of thousands of people including his own supporters, ignoring the people’s cry (Beck et al., 2016).
One the components to attain a sound fiscal management lies on a fitting internal environment, which in this case is the government. Public expenditures and financial accountability assessments were a permeating tool to assess public financial management performance (Haque et. al., 2015). The budget allocation of a government must incorporate key sectors that will enhance the well-being of the citizen rather than concentrating resources in areas that will only benefit the political leaders – the three arms of the government (Executive, Legislature, and Judiciary) (Egbide & Agbude, 2012). Yet, despite government efforts to restore public confidence, more steps must be taken to recuperate public perception towards the public sector accountability (Khalid et. al, 2016).
Theoretical and Conceptual Framework
Taxation is mainly formed based in its principles. This study is based on one of the general principle of taxation, The Benefits-Received Principle. It states that the government may collect taxes in order to perform its functions. Moreover, in return for the taxpayer’s contribution is the protection, proper business climate, peace and order provided to the taxpayers (Valencia ; Roxas, 2013).
Since this study wanted to determine the relationship of the satisfaction level of taxpayers on the government programs towards the average net household income., figure 1 will show the independent and dependent variables.
7620167982Average Net Household Income
00Average Net Household Income
Government Programs in terms of:
Peace and Order
Good Governance and Sound Fiscal Management
Government Programs in terms of:
Peace and Order
Good Governance and Sound Fiscal Management
Figure 1. Conceptual Framework of the Study
This study focused on the influence of the satisfaction level of an individual taxpayer on the government programs inside Davao City such as peace and order, social welfare and good governance and sound fiscal management towards the change in their average net household income.
This chapter presents the research design, the research instrument, research respondents, data gathering procedure, and the statistical used.
This study used correlation design to determine the relationship between two or more variables (Lomax ; Li, 2013). Correlation is defined as the statistical test used to determine the pattern for two or more variables or sets of data to vary their consistency (Creswell, 2012). This method best suited the study because it will be used to measure the relationship of the satisfaction level of the individual taxpayers from the government programs in Davao City towards the household income.
The respondents that was selected in this study were individual taxpayers that represented a household in the area of Davao City. The researchers used the Sample Size Calculator by the Raosoft, Inc to generate the sample size. The total number of household registered in Davao City is 409,951. And according to Marjissen (2017), exceeding the population size of 20,000 will not make any necessary change in the sample size. Therefore, there is a total of 377 respondents that was chosen randomly to take part in answering the constructed survey questionnaire. Stratified Random Sampling is used as it is the taking samples from each stratum or sub-group of a population (Stefano, 2013). This sampling technique suited the study because a household consists of 4 individuals and the researchers have only chosen 1 individual to represent the whole. They are the respondents of this study because the researchers want to know their household income and satisfaction level towards the government programs they received in Davao City.
The researchers used a survey questionnaire as this instrument collects the data needed for the completion of the study. The questionnaire is divided into two categories: The first part is composed of questions regarding to the household income. The second is about the satisfaction level of the individual taxpayers on the government programs in Davao City.
The survey questionnaire was checked and validated by the panel of experts to ensure relevant and reliable results.
This study used various scaling tools as a standard for the interpretation of data gathered.
The researchers used the interval rating scale to interpret the level of satisfaction of the taxpayer towards government programs and household income.
Description and Interpretation of the Level of Satisfaction on Government Programs
Mean Range Description Level Interpretation
4.20 – 5.0 Very High This indicates that respondents’ level of satisfaction is highly impressive.
3.40 – 4.19 High This indicates that respondents’ level of satisfaction is satisfactory.
2.60 – 3.39 Moderate This indicates that respondents’ level of satisfaction is not certain.
1.60 – 2.59 Low This indicates that respondents’ level of satisfaction is poor.
1.00 – 1.79 Very Low This indicates that respondents’ level of satisfaction is very low.
Description and Interpretation of the Correlation Coefficient Value
Correlation Coefficient Value Verbal Description
±0.70 to ±0.99 Very Strong
±0.40 to ±0.69Strong
±0.30 to ±0.39Moderate
±0.20 to ±0.29Weak
±0.01 to ±0.19Very Weak
0.00No Relationship at all
Data Gathering Procedures
The following steps were taken in conducting the study.
Permission to Conduct Study. The researchers had first secure a letter of permission from the coordinator of the research study.
Administration/Distribution of Questionnaire. After the validation of the survey questionnaire from the selected experts, the researchers distribute the set of questionnaires to the selected respondents. The questions were based on the objectives of the study and were explained further by the researchers for the better understanding of the respondents.
Retrieval of Data. The distributed survey questionnaires are then collected from the respondents after it was filled out.
Tabulation. The collected questionnaires were then extracted and encoded in excel to get the data needed to start the statistical analysis and interpretation.
Analysis and Interpretation. The encoded data were sent to the statistician to be analyzed and interpreted using the mean and pearson-r for correlation analysis. Afterwards, the researchers further discussed the results and started writing the summary, conclusions and recommendations.
The following statistical tools were used for a valid and reliable analysis and interpretation of data:
Mean. This statistical tool is used in the analysis of the respondents’ level of satisfaction on the government programs in Davao City.
Pearson-r. This statistical tool is used to determine if there is a significant relationship on the satisfaction level of the individual taxpayers from the government programs in Davao City towards the household income.
Result and discussion
This chapter deals with the presentation and discussion of the data on the variables of the study including their implications.
Average Net Household Income
Average Net Household Income
Minimum Maximum Mean
3,000.00 8,000.00 57,412.32
The results in Table 1 show that the minimum average net income of a household in Davao City amounted to ?3,000.00 while the maximum is around ?800,000.00. Based on the survey, the minimum household income is ?500.00 that consist of two members in the working class; it shows that the greater number of members in the household the least income they can save. The minimum average net income is below the average income range of the latest FIES Survey in 2015 which is at ?86,000.00. The reason for this might be because of the outdated tax bracket that taxes 10 percent-15 percent of the gross income that will reduce the income to ?800-2,500 a month (personal expenses not yet deducted) (Jiao, 2016). Aside from that, the expenditures of a Filipino family were mainly spent on food; in fact 41.9 percent of the family income goes to food alone (Bersales, 2016). Therefore, the net income won’t be that much for the reason that aside from the taxes and the food, there are also other expenses to be considered such as for medical, education and for renting that is considered today a necessity to survive on a daily basis.
Whereas, the maximum average net income of ?800,000.00, is above the range of the FIES survey which is at ?786,000.00. This may be because the household income may not only come from salaries but also from their businesses, investments and other sources of income (Garosi, 2015). A sample data in our survey result that their monthly household net income amounted to ?400,000.00 and have 3 members that is all professionals and has a certain position in their own company. In fact, according to a study, people who have a good educational background have the most influential factor in the household income. The higher the educational level, the more income can be generated (Carlson & McChesney, 2014). The person with a professional degree tends to earn 6x more than those undergraduate (Lhing, Nansei & Takeuchi, 2013). And there in an average number of 4 members in each household where a one or two with a professional degree or have a family business would probably generate more income than the others.
In computing the mean average income, the outcome shows that an average family has a net income of ?57,412.32 and it is not far-off from the ?52,000.00 average savings of a Filipino family that was stated in the latest FIES Survey ina household having an average income ranges of ?86,000.00 to ?786,000.00 (Bersales, 2016).
Satisfaction on Government Programs
The study comprises of indicators such as peace and security, social welfare, and good governance and sound fiscal management.
Satisfaction Level on Government Programs in terms of Peace and Order
Item Statements Mean Descriptive level
The performance of police roaming around the city from daytime to nighttime. 4.26 High
The performance of police against theft/robbery cases. 4.01 High
The curfew implemented within the city. 4.30 High
Maintaining peace in your neighborhood (riot, inter-personal, inter-familial, gangster conflict). 4.05 High
The performance of the police on illegal drugs (pushers/ addicts). 4.20 High
The reinforcement of the police when there’s a criminalities and insurgencies. 4.10 High
The implementation of peace and order around the city. 4.38 High
The performance of Joint Task Group Haribon (group against terrorism). 4.12 High
The reinforcement of Barangay Tanod that would enhance the Davao City police force in maintaining peace, laws and order. 4.09 High
The police visibility within the city. 4.32 High
Overall 4.18 High
The results in Table 2.1 show the mean score point for each item for the government programs sub-indicator peace and order. Having a 4.18 over-all mean score with its description as satisfied, it implies that the respondents were satisfied in terms of the peace and security within the Davao City.
The highest mean (4.38) which is from item 7 describes that the respondents have seen and felt the implementation of peace and order in the city. On par with it is the result from item 10 (with 4.32 mean), that states that the respondents were also satisfied to witness that the police are in action in implementing the peace and order thus providing a sense of security when going out or even when staying at home. This is in line with the study of Rus, et al. (2013) that the greatest role of a police is to provide a sense of safety and protection. Moreover because of the curfew implemented in the city, the residents in Davao City especially the underage will have to be at their respective houses before the allotted timeframe to ensure their safety. And this earned satisfaction with a mean of 4.30 in item 3 from the respondents because they know that their family members are safe in night time because the police on duties will ensure that no one especially the underage is outside. This is more helpful for those who are prone to harassment especially the women (Serran, 2016) and threats such as kidnappings, robbery and murder (Aquino et al., 2016).
However, the case is different when assessing the performance of the police force against criminalities. The result shows that the lowest (4.01) pertains to the performance of the police against theft/robbery. It does not differ much on the 4.05, 4.09 and 4.10 which also tells about the performance of the police and barangay tanods against criminalities and maintaining peace in the neighborhood. The respondents were momentarily in doubt when it comes to the result of the performance against unlawful acts. As media reports numerous crimes done in every region like theft, physical assault and robbery (Felipe, 2015). Though, they do support the aim of the government in providing peace and security, there is still problem when it comes to the result. In fact, in 2014 the recorded crime on individuals reached 258,444 (Philippine Statistics Authority, 2014). This might be the reason why the respondents have a lower satisfaction towards the performance of the police and barangay tanods because they were not confident to them as they were supposed to be in the first line of defense against any criminal acts. And even the PNP responded that they are indeed limited in capacity to assist everyone due to lack of essentials (Overseas Security Advisory Council, 2016).
Satisfaction Level on Government Programs in terms of Social Welfare
Item Statements Mean Descriptive level
The availability of healthcare services (free checkups, Lingap Programs, NBBP, Philhealth, Tsekap). 4.14 High
2.The performance of DSWD in addressing social issues and concerns. 4.04 High
3.Services and benefits provided by SSS, Philhealth, Pag-ibig, and GSIS such as pension, maternal, loans, sickness, death or funeral. 4.15 High
4.The services on the parenting programs provided by the city government. 3.87 High
5.Support services programs for adopted child, disabled family member, or an HIV family member. 3.77 High
6.Programs implemented on Community-based child minding center and day care centers. 3.93 High
7.The supplementary feeding programs (“Feeding Hope” ; “Lutong Nanay”) of the local Government. 4.11 High
8.DSWD’s medicine assistance program. 3.97 High
9.Assistance provided (payments for hospitalization, funeral services; food assistance; financial assistance, and other social service interventions) by the Ugnayan Crisis Intervention Center, DSWD, RedCross, Lingap etc. 3.96 High
10.The Home-Based programs such as Early Childhood Care & Development (ECCD) ACT that refers to the services at the family level undertaken at home or in the neighborhood-based playgroups. 3.77 High
Overall 3.97 High
Table 2.2. Illustrates that the overall mean score point for the government programs on social welfare is 3.97 with its description as satisfied, it shows that the respondents are satisfied in the overall performance of the government in providing support on the welfare of a family. The highest mean (4.15) and the lowest (3.77) is from item numbers 3, 5 and 10 respectively, though both represented the respondents being satisfied.
The highest mean describes that the respondents know, availed and were satisfied on the social security services provided by Philhealth, SSS, Pag-Ibig and GSIS. These services include pensions, maternal, loans, sickness and death. They were more satisfied particularly in this government program because it aids with their social security needs such as loans from SSS which most of the respondents availed for their personal use, business or for the education of their children. Programs, as such, grants cash provided that they meet certain requirements set by the government (Fernandez & Olfindo, 2011). This attest to the research of Kasmaoui and Bourhaba (2017) that social support has a large and important impact on the happiness of an individual followed by health. Followed by the 4.14 mean in item 1 which is about the healthcare services, the respondents were also satisfied with the free checkups operated in their barangays, Lingap Programs in SPMC, the availability of NBBP (No Balance Billing Policy) and Tsekap. These services particularly on healthcare are the most alluring to the respondents because it does help them in time of crises. Most of the respondents were aware and has been availing the free checkups from their vicinities, tried the reduction to total free of bills when being hospitalized and the prescriptions thereto. They are satisfied because they have experienced these benefits and they are well accommodated based on their needs. Aside from that, there are also Feeding Programs from barangays and even in front of the city hall. And this earned a satisfaction rate of 4.11 because the respondents were satisfied with the concern of the city government on the health of their inhabitants. This support Gebregziabher and Niño-Zarazua (2014) statement that government expenses that focuses on health are more effective in developing the human capital.
However, the lowest mean which describes the support services for an adopted child member, disabled family member or an HIV positive member. This might be due to the fact that not every household have the same case scenario. When asked, the respondents were hesitant because aside from having other priorities to focus on, there is also limited information on the programs that help individuals who are undergoing these situations, thus receiving the least satisfaction towards the government programs on social welfare. Though citizens knew that the primary agency to run to in case of concerns on social welfare is the (Department of Social Welfare and Development) DSWD (Official Gazette, 2017). On the other hand, in par with the mean in item 5 is the item 10 which is about the Home-Based Program specifically on the Early Childhood Care & Development Act which aims to provide basic education to the children below 5 years’ old for them to be readily equipped once they go to kindergarten. This may also be rated as the lowest because not everyone was aware of the program since they are more focused on the benefits that will aid them in improving the well-being and health of their family. It only proves the statement of Gebregziabher and Niño-Zarazua (2014) that health spending is more effective than in education in the development of the human capital because families tend to be more interested in healthcare services rather than on developing the education.
Satisfaction Level on Government Programs in terms of Good Governance and Sound Fiscal Management
Item Statements Mean Descriptive level
The availability of information on Government Spending. 3.37 Moderate
2. Government’s spending activities. 3.44 Moderate
3.Projects made and sponsored by the government. 3.67 High
4.Outcomes of the “the War on Drugs”. 4.04 High
5.Government’s priorities and budget. 3.89 High
6.Government’s report, and communication about the consequences of its decisions. 3.76 High
7.The government’s implementation of the rule of law (this means that decisions are consistent with relevant legislation or common law). 3.72 High
8. Government’s responses to community needs. 3.74 High
9.The government’s concern to its people’ interests and opinion for the betterment of the community. 3.66 High
10.Local government’s implementation of local projects and initiatives. 3.83 High
Overall 3.71 High
Table 2.3 shows that the government programs in terms of good governance and sound fiscal management has an overall mean of 3.71 which means that the respondents are also satisfied with how the government govern and manages their jurisdiction.
The highest mean (4.04) in item 4 tells us that the respondents are well satisfied with the ongoing progress of the “War on Drugs campaign” of the presidenteven though there’s a lot of critics oppose to it especially the Human Rights, United Nations, Catholic Church and other individuals who are not in favor of the rulings of the Government. It supports Ghirmai (2011) saying that a responsible governance should work on protecting the citizens’ fundamental human rights to build and sustain a developing society. This act may not reduce poverty, but it does allow the citizens to reorganize their lives. Also, by proper usage of taxes, it will enable the better handling of economic crises such as drugs dealing.
The lowest got 3.37, which conveys that they are neither satisfied nor dissatisfied on the ways the government disseminate its information on where they spend their budget. It didn’t meet their satisfaction, might be because the information they’ve known is not clear enough for them to really know where the Government spends the money from the taxes paid by the taxpayers. This attested the statement retrieved from (Financial Growth Solutions UK, 2014) that poor dissemination will likely lead to risks. However, when known where the budget was being spent such as on the campaigns on War on Drugs, there are opposing results. With a mean of 3.89 and 3.83 in items 5 and 10 respectively, it will show that the respondents were satisfied with the priorities of the government where the most budget were being allocated and the initiative of the government in the implementation of their local projects. Yet, the result also shows that the respondents are neutral on where the government spends the country’s budget. This can be shown through the survey conducted by Haskins (2010), which stated that the public are very unsatisfied and distrustful towards the government regarding its spending activities. It cannot be removed from the minds of the people the doubt towards the government because of some cases of bribery and corruption. As explained by Khalid et al. (2016) that despite government efforts to restore the trust of the public, more steps must be taken to recuperate their perception towards the government’s accountability.
The table 1.5 shows the overall satisfaction of the respondents on the government programs. With an overall mean of 3.95, it confirms that the respondents were satisfied with the programs of the government. The highest (4.18) mean comes from the peace and security while the lowest (3.70) from the good governance and sound fiscal management. This has shown that the respondents are more specifically satisfied with the implementation of the peace and security here in Davao City than the total performance of the government.
Overall Satisfaction Level on Government Programs
Indicators Mean Descriptive level
Peace and Security 4.18 High
Social Welfare 3.97 High
Good Governance and Sound Fiscal Management 3.71 High
Overall 3.95 High
Correlation Analysis on Household Income and Satisfaction level
The main problem of the study involves the determination of the significant relationship towards the household income and the satisfaction level of the taxpayers on the government programs.
Significant Relationship between Household Income and Satisfaction Level on Government Programs
Indicator Pearson r- value P-value Decision Ho
Peace and Security -0.016 0.76 Do not reject
Social Welfare -0.051 0.33 Do not reject
Good Governance and
Sound Fiscal Management 0.037 0.486 Do not reject
Level of Satisfaction Overall -0.007 0.891 Do not reject
If P-Vale is less than 0.05, reject the hypothesis
The result in table 3 answers the question about the significant relationship between household income and the satisfaction level. According to the results above, there is no significant relationship between the household income and the satisfaction level of taxpayers on the government programs. All P-Values of the government programs exceeded the 0.05 level of significance causing the null hypothesis to be accepted. The probable reason is that it does not affect however satisfied a taxpayer is towards the government programs on their performance in generating their income and also the way they spend it for their family because a person has its obligation to earn and spend for their family, such as bills, daily needs, school fees, and unplanned expenses (Matusiak, 2013) even if he/she is not that satisfied with the government’s performance.
From the study of Akay et al. (2012), the effect of withdrawal of personal income because of tax has negative effect on the subjective well-being of an in individual, though they do have a positive effect when the government spends for the public through the building up of new infrastructures, setting up on good education system and promotion of health care services (Kasmaoui & Bourhaba, 2017). And focusing on health spending does more effect in developing human capital than focusing on education and social security as health is the most crucial for a person who is earning for their family (Gebregziabher & Niño-Zarazua, 2014).
Findings, Conclusion and Recommendation
This chapter presents the summary of findings, conclusions and recommendations based on the analysis of the data obtained.
Summary of Findings
The results of the study were being summarized as follows:
The highest average household income recorded is ?800,000 while the lowest in Davao City ?3,000.
The results showed the public is highly satisfied with the government programs. The government programs have an equivalent satisfaction level which is high. But if it will be based on their means, the peace and order exceeds the other government programs, followed by the social welfare then good governance.
There is no significant relationship between the household income and the satisfaction level of the taxpayers on the government program, thus the null hypothesis was accepted.
The findings of this study brought us to this conclusion:
The public is most satisfied with the peace and security implemented in the city, having the highest mean. This serves as an evidence of success for this has been the top priority of the current administration and it could be clearly seen that it had been done well. While social welfare came second this fact had remained steady for years. Good governance and fiscal management came third with the lowest mean. This could mean that the stigma on fiscal management is just something that the people can’t disregard which could be easily understood, for corruption had been included in facts that came from a long line of history. The bottom line is that there is no significant relationship between the household income and the satisfaction level of the taxpayers on the government programs.
Based on the conclusions drawn are the recommendations deemed fit by the researchers:
Taxpayers – do not live beyond your means. Prioritize the commodities, the immediate needs, save the money left after fulfilling these needs. Before luxurious expenses, best thing to do is to use this saved up money for an investment. Expenditures will never end may it be the needs or the wants. An inflow of money is required to cover this and earnings aside from the compensation income which is mostly not enough even for the most basic needs is recommended for better security. This inflow should equate, or better, should be greater than the outflow to avoid deficits and actually save better.
Government – since good governance and fiscal management has the lowest satisfaction from the public, this is where the government needs to improve on to enhance the taxpayer’s satisfaction. Attaining complete and absolute transparency is recommended to remove doubts from the citizens’ minds. Also, programs by the government that could teach the people how to handle money effectively should be established or if already present, methods for dissemination of information must be enhanced to reach greater number of people. Locally, barangays should play a vital role in letting the people know about the programs for they are closer to the people by governing a smaller area. Such as the Livelihood programs for housewives that is really beneficial to families who wanted to increase their income should be strengthen. This type of program will be helpful to improve their household income.