Taiwan’s growing income gap

According to the latest statistics released by the Finance Ministry, the gap between the rich and the poor in Taiwan has widened rapidly. Out of the 4.35 million households who filed income tax reports in 2007, the average annual income of the top 5 percent is NT$4.28 million (US$131,000), while the bottom 5 percent is NT$69,000 (US$2,120) – a gap of 62 times.

This is double the gap in the previous ten year period preceding 1998, when the top 5 percent and the bottom 5 percent had a gap of 32 times, the widening trend in income distribution is getting worse according to the Taipei-based China Times.

Taiwan suffered a severe economic recession in 2001 when the growth of its gross domestic product (GDP) was negative 2.1 percent and the gap between the top 5 percent and the bottom 5 percent was 42 times. Since 2001, Taiwan has had a positive GDP, but the gap between rich and poor has continued to widen.

In another study by the Ministry of the Interior, the Department of Budget, Accounting and Statistics found that from 1998 to 2007, the average Taiwan disposal income grew at 5.49 percent. While the highest income household grew at an impressive 8.18 percent, the lowest income household only gained 0.41 percent.

According to the China Times, the yawning gap has expanded further due to the governmental tax policy that has benefited the rich. The government has also instituted many tax reduction measures in response to the economic recession,additionally benefiting the rich and widening income redistribution gap between the two extremes.

Meanwhile, the Ministry of Interior has announced that the number of household below the poverty line in the first quarter has shot up to 93,000 – 10,000 more than last year. The number of low-income families has also increased to 224,000, which is an all-time high according to the Commercial Times.

In the paper’s editorial, it speculated the widening of the wealth gap could result in social instability. The paper called on the government to take immediate action, saying that fair taxation is the foundation of social justice and values. By adopting a tax system favoring the wealthy, it worsens the gap between the rich and the poor, deteriorating class relations.