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Apple Daily: Income gap at alarming levels

2010/08/20 13:22:34

The prevalence of capitalism around the globe has led to awidening gap between the rich and the poor. Not only has the gapbetween rich and poor countries become enlarged, a similarpredicament can also be seen in society.

The latest statistics released by the Cabinet show that theincome gap between Taiwan's richest and poorest households haswidened 66 times over the past 11 years.

In 2008, the average annual income of the top 5 percent wageearners amounted to NT$4.5 million (US$140,625) , compared to anaverage of NT$68,000 grossed by those in the bottom 5 percentbracket. In comparison, the income gap between the two groups wasonly 32 times 10 years previously in 1998.

The 2008-2009 global financial crisis could have contributed tothe broadening of the wealth gap, as more people lost their jobs orsaw their wages cut during the economic recession, while rich peopleat the pinnacle of the income pyramid remained intact.

Even though Taiwan might be able to achieve a 7 percent GDPgrowth rate this year, the wealth gap is not expected to narrow muchbecause of the ever-rising ratio of "triangle trade" in the country'soverall foreign trade.

"Triangle trade" refers to order-taking in Taiwan, productiontaking place in China and goods finally exported to thirddestinations such as America and Europe.

The ratio already shot up from 13 percent in 2000 to 50 percentin June this year. The triangle trade might help drive Taiwan'seconomic growth rate up, but only exporting companies and theirshareholders will enjoy the fruits, while most other people and thedomestic consumer market will not experience any positive impact, asrevenues from this kind of trade are usually banked abroad.

In the face of this development, the government should craft asound tax system and adjust the tax rate from time to time to ensuremore equitable distribution of wealth while not scaring awayinvestors. Otherwise, the rise of an anti-mercantile complex could bean ominous sign of social instability. (Editorial abstract -- Aug.20, 2010).

(By Sofia Wu)