Poor getting poorer, rich getting richer – IBON

“It is cliché to say but the rich are still getting richer and the poor getting poorer,” said Sonny Africa, IBON Executive Director.

Research group IBON shared its regular year-starter national situationer discussion on January 24 at the Commission on Human Rights in Quezon City.

“The richest 40 people has the equivalent of all the wealth of the poorest 40 million in the country and this is getting worse. What the government did and has succeeded to do is make the rich richer,” explained Africa.

Africa said that while the government has many various social services, these remain limited. He added that the tax reform program of the government also favored big business interests, exacerbating economic equality or the “gap between the rich and the poor.”

“You impose more taxes on the poor, then you cut taxes of the rich – that is exactly the problem of the whole tax reform program of government that started with TRAIN,” said Africa.

Africa said the design of TRAIN, short for Tax Reform for Acceleration and Inclusion (TRAIN) and the first package of the President Rodrigo Duterte’s administration’s comprehensive tax reform package, is to cut the income taxes, donor and real estate taxes of the richest families, and then to lower corporate and income taxes of the richest companies.

The Philippine Statistics Authority (PSA) reported 5.9% annual growth in gross domestic product (GDP) for 2019, missing government’s revised target of 6-7% growth for the year. IBON said that the economy is on its third year of slowing growth under the Duterte administration, and the slowest in eight years or since the 3.7% in 2011.

Government attributed the missed target to the delayed 2019 national budget, the election ban on infrastructure in the first half of 2019 and slowing agriculture due to weather-related factors like El Niño.

IBON countered government’s claim, noting that the economy was already slowing prior to this.

The group said that government has relied on temporary external factors to drive growth, but these are weakening.

“In year 2000, investment and BPO sector grew, then in 2011 foreign investment flattened and started to slowdown. When OFW remittances weakened, the response of the government to drive growth is government spending,” said Africa.

IBON said that the economic slowdown is really due to the lack of strong foundation in agriculture and Filipino industry – made worse by government’s faulty market-oriented policies.

“Ever since the government focused on globalization policy, production fell to the point that in 1980 we were already a service economy more than a producing economy. And because you destroyed domestic industry, the tendency of this in economy is to slow down,” said Africa.

IBON said that the government should admit its failure and take on real reforms needed to strengthen and develop agriculture and domestic industries and turn around the country’s flagging economy.