The Filipino Middle Class: Government Afterthoughts?

The Filipino middle class has long been heralded as the backbone of the nation’s economy. With their significant contributions to tax revenues, they play a pivotal role in funding government programs and services. However, this group often finds itself in a precarious position, struggling to access the benefits and assistance that they rightfully deserve. In stark contrast, the lower class receives a more substantial share of government aid, raising questions about equity and fairness in the distribution of resources. This blog post delves into the complexities surrounding the Filipino middle class, their contributions, and the challenges they face in accessing government benefits.

Understanding the Filipino Middle Class

To grasp the nuances of this issue, it is essential to define what constitutes the middle class in the Philippines. According to the Philippine Institute for Development Studies (PIDS), the middle class is classified as those earning between ₱43,828 and ₱76,669 monthly. This classification has evolved over the years, reflecting changes in economic conditions and inflation. In 2018, the threshold was lower at ₱38,080, indicating a 15% increase in just two years due to rising living costs.

As of recent estimates, approximately 25% of Filipino families fall into this middle-income bracket, while a staggering 75% belong to the lower class, with many living below the poverty line. This demographic reality highlights the middle class's vital role in the economy, contributing around 22.36% of total tax revenues, which is a significant increase from 18.63% prior to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The Tax Burden on the Middle Class

Despite their substantial contributions, many in the middle class feel overtaxed. The Philippines has one of the highest average tax rates in Southeast Asia, with a marginal tax rate of 32% for the highest income bracket and a value-added tax of 12%. This heavy taxation can lead to a phenomenon known as "bracket creep," where individuals find themselves pushed into higher tax brackets due to inflation, despite not experiencing real income growth.

The middle class often bears the brunt of this tax burden, funding government programs while simultaneously struggling to make ends meet. They are caught in a vicious cycle where their contributions do not translate into adequate support or benefits from the government, leaving them feeling undervalued and overtaxed.

A Stark Contrast: Benefits for the Lower Class

In contrast, the lower class in the Philippines receives a more substantial share of government benefits. Programs such as the Social Amelioration Program (SAP) were designed to provide cash assistance to low-income families, especially during crises like the COVID-19 pandemic. While these initiatives are crucial for alleviating poverty, they often exclude the middle class, who also face economic hardships but do not qualify for the same level of assistance

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For instance, during the pandemic, the government allocated funds to support around 18 million indigent families, while middle-class families were left to fend for themselves. This disparity raises critical questions about the fairness of the government's approach to social welfare. Shouldn't those who contribute significantly to the tax base also receive support in times of need?

The Middle Class: An Overlooked Demographic

The neglect of the middle class in government assistance programs has sparked discussions among lawmakers and advocates. Prominent voices, such as Rep. Joey Salceda, have called for a more inclusive approach to aid distribution, suggesting that a universal basic income could be a viable solution. This proposal aims to provide financial support to all Filipinos, except the wealthiest 10%, recognizing the middle class's contributions to the economy.

However, the government's response has been lukewarm. While officials acknowledge the challenges faced by the middle class, funding constraints often hinder the implementation of more comprehensive support measures. The President himself has expressed a desire to include the middle class in relief efforts, but the reality remains that many middle-income earners are left without adequate assistance.

The Case for Demanding More

Given their significant contributions to the tax system and the challenges they face, it is imperative for the Filipino middle class to demand more from the government in terms of benefits and assistance. Advocacy for equitable treatment is essential, as the middle class serves as a critical driver of economic growth and stability.

By mobilizing and voicing their concerns, the middle class can push for policy changes that recognize their contributions and address their needs. This includes advocating for adjustments in tax policies, improved access to social programs, and the establishment of safety nets that cater to their unique challenges.

A Call for Equity

The Filipino middle class stands at a crossroads. They are vital contributors to the nation’s economy, yet they often find themselves overlooked in government assistance programs. The stark contrast between the benefits afforded to the lower class and the middle class raises critical questions about equity and fairness in resource distribution.

As the middle class continues to navigate economic challenges, it is crucial for them to advocate for their rightful share of government support. By doing so, they can ensure that their contributions are recognized and that they receive the assistance they need to thrive in an increasingly challenging economic landscape. The time has come for the Filipino middle class to demand the respect and support they deserve, not just as taxpayers, but as essential members of society.