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Income inequality widening amid strong economic growth

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ARMM 053119 - Income inequality widening amid strong economic growth
PHILSTAR

THE regional disparity in wealth has widened throughout the years, mitigated only by high levels of overall economic growth and a trend towards reduced poverty, the National Economic and Development Authority (NEDA) said Thursday.

“Data shows the richer regions are getting richer so it’s also quite possible that the upper income classes are getting richer… The high-income classes are concentrated in the high-income regions for example the National Capital Region,” Adoracion M. Navarro, NEDA Undersecretary, told reporters during the #AskNEDA briefing in Pasig.

“We should be glad that we have a high growth trajectory and we have good poverty figures. But income inequality is another story. We should be challenged by that,” according to Ms. Navarro.

Citing data from the Philippine Statistics Authority (PSA), Ms. Navarro said the Eastern Visayas and the Autonomous Region in Muslim Mindanao (ARMM) had the lowest average per capita gross regional domestic product (GRDP) growth rates at 0.8% and 0.5%, respectively between 2012 and 2018, with relatively high poverty rates.

Income inequality in the Eastern Visayas was also high, while ARMM had the lowest levels of inequality. The Eastern Visayas has a per capita GRDP of P38,598, while the equivalent figure for the ARMM, know known as the Bangsamoro ARMM, was P14,657.

“This phenomenon of growing inequality is also something that is seen in other parts of the world particularly in countries recording high economic growth like the Philippines,” Ms. Navarro said. According to Ms. Navarro, the government is addressing disparity via cash transfers and reforms to the tax system. However, she added, these are not enough.

“We are doing [income redistribution] through cash transfers and we are fixing our taxation system. We are pursuing a more progressive taxation pero kulang pa (but it is not enough). Let’s look at the nuances of the economic growth story,” Ms. Navarro said.

Ms. Navarro said there was a need to focus on the agriculture sector, and said that NEDA is seeking to transform the Caraga region into an agricultural hub and weaning it away from its current dependence on the mining sector.

Ngayon (As of now) Caraga is heavily dependent on the mining industry. Government is now stricter on mining and there are now closures in Caraga. Government is now identifying alternatives to mining and that is agriculture,” Ms. Navarro said.

“NEDA is contributing to this strategy. We are undertaking a study of alternatives to mining in Caraga. It will be finished in December. I hope stakeholders will take something from the study,” Ms. Navarro added.

Ms. Navarro added that “the manufacturing sector will play a huge role in reducing regional disparities” and “improvements in ICT (information and communications technology) will also reduce regional disparities because it will provide more economic opportunities for people in the low-income regions. At the same time it will reduce the administrative cost of government in pursuing income redistribution programs.”

Ms. Navarro said that the passage of the Comprehensive Tax Reform Package (CTRP) will help in addressing the disparity, citing as an example the increase in sin taxes to fund Universal Health Care that will be beneficial for the poor.

“We’re still hoping the 18th Congress to pass the tax packages,” Ms. Navarro said. — Reicelene Joy N. Ignacio

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