THE ROOT CAUSES OF ECONOMIC INEQUALITY OF SAMTSKHE-JAVAKHETI REGION AND THE REDUCTION WAYS

Giorgi JVARIDZE

The introduction discusses the importance of the study problem, study subject and object, the goal and objectives, the described research methodology and findings of the research. The innovations of the research are highlights. The research was conducted in Samtskhe-Javakheti region.

At the beginning, the reasons of unequal distribution of income from the perspective of different scientists, the coefficients of the equal and unequal distributions are reported.

For presenting global economic inequity we referred the study of Monetary Fund, according to it the global inequity index is 0.55-0.70. In 2018 Gini coefficient in Georgia reached to 0,37, while it is close to the critical range (0,41-0,46).

Gini Coefficient are as follows according to the municipalities of Samtskhe-Javakheti -Akhaltsikhe - 0,41, Adigeni - 0,52, Aspindza - 0,52, Borjomi - 0,47, Akhalkalaki - 0,50, Ninotsminda - 0,56. According to the findings an average inequality index of the region is 0,49, or 0,09 higher than it is estimated by the Geostat for the region (0,40).

We conducted a public attitude survey on starting up business and immigration. 60-80% of surveyed reported that they have no business as they cannot start it. 90-100% plans to immigrate. 

In order to develop an inclusive business, it is necessary to support skilled young people from the vulnerable families, include them in the business study and organizing business incubators.

The study reports an explain establishment costs per one business incubator which should be covered by the local budget.

Another problem referred is substitution of a proportional tax by introduction of progressive tax.  All the promoted countries in the world apply the progressive tax system, what means that tax payer with higher income pays more compared to those who have less income. There is untaxed income as well. We developed the scale for progressive tax for Georgia and Samtskhe-Javakheti region in particular and defined the size for the non-taxable income as well (500GEL).

Key Words: An economic inequality, Gini Coefficient, an inclusive business-incubator, proportional tax, progressive tax.