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Addressing inequality

The Philippines lagged behind its Asian neighbors when it comes to addressing inequalities since the outbreak of the COVID-19 pandemic in 2020, according to the 2022 Commitment to Reducing Inequality (CRI) index report of international organization Oxfam and the Development Finance International which ranked the country 102nd out of 161 countries.

The CRI index measures each national government’s efforts to reduce inequality through “public services spending, taxation and labor rights and wages.” The Philippines ranked 109th out of 158 countries in the previous CRI report in 2020.

The report noted that while the Philippines spends two-fifths of its government budget on education, health and social protection, including pensions, it was lagging behind allocation for the same purposes of its neighbors in East and South Asia such as Mongolia, China, Thailand, Vietnam and Malaysia.

Oxfam Philippines country director Lot Felizco pointed out that while Filipinos have been grappling with unemployment and high cost of food and living expenses due to inflation and the pandemic, the country’s essential health spending remained dismal, with about 55 percent of the population having no coverage of essential health care and being burdened by out-of-pocket health spending. This pushes more people into poverty, resulting in further inequality.

The 2022 CRI index also showed the country lagging in terms of “Reducing inequality through progressive tax policies,” primarily because of low tax collection, collecting just 19 percent of potential revenue, well below the regional average of 31 percent, surprisingly lagging behind Afghanistan, Sri Lanka and Myanmar which are facing economic and political turmoil.

Their analysis points to the likelihood of widespread tax dodging and evasion by the wealthy and their corporations, excessive tax breaks and weak enforcement measures by the tax authority.

The unfortunate combination of poor and unfair tax collection that results in less funding for education, health and social protection is one reason why inequality remains a problem in the Philippines. As long as government fails to address this serious problem, the inequality will only worsen and the very few rich will become richer while the majority that remains poor will only become poorer.*

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November 2022
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