When CERB was announced, some wondered if it were a gateway to “universal basic income” – cash made available to all adult citizens of a country without having to work or meet any other conditions. But what exactly is the Universal Basic Income? This explainer examines who would get it (and why), how we could fund it, and if we are really ready to implement it in Canada.
What is the Universal Basic Income?
The idea of a regular monthly income that the state pays out to all citizens has been around for hundreds of years. In the 16th century, the English philosopher and lawyer Thomas More proposed a form of basic income in his book Utopia. “Providing everyone with a livelihood,” he argued, would ensure that “no one is exposed to the dire need of becoming a thief first and then a corpse.”
The concept of Universal Basic Income (UBI) hasn’t really changed in the more than 450 years since More’s proposal. The UBI is now generally thought of as a universal transfer of money to all adults in a sufficient amount to cover “basic needs” – usually understood as an amount that brings the recipient’s income to the poverty line. (In 2018 the Federal government passed an official poverty line, the “Market Basket Measure” of poverty. With this measure there are poverty lines for 50 regions across Canada, ranged from a 2018 high of $ 48,667 in Vancouver for a family of two adults and two children to a low of $ 37,397 for the same family in small town Quebec.)
While the concept of the UBI is easy to understand, there is little consensus on how it could be implemented. For example, some proponents argue for a universal tax-free amount paid to all adults regardless of any other income they may receive; This is the model of the “freedom dividend” endorsed by US presidential candidate Andrew Yang for 2020. Others, such as Basic Income Canada Network, have focused on an income-related benefit that provides the full benefit to people without other sources of income, with the benefit being reduced as income increases and eventually phased out completely.
What problem is the universal basic income supposed to solve?
UBI is proposed to ensure that all households have the economic means to afford a modest basic standard of living, including food, clothing, shelter and transportation, regardless of whether they have a work income. As a social policy analyst John Stapleton mention, that, Canada already has a working UBI for children and over 65s over the years Canada child support and the Old-age insurance Program that includes the Guaranteed Income Supplement (GIS) for low-income seniors. The question is how adults of working age could also be included.
Philosophically, the argument for UBI is often based on the premise that land and natural resources are the common property of all individuals and that the wealth generated from land and resources should be at least partially shared among all members of a society. This is the model behind for example that Permanent Alaska Fund, which pays a taxable annual payment – the Permanent Fund dividend – to all Alaska residents (including children) from the revenues from the state’s oil reserves.
Other reasons for UBI are based on our goal of reducing poverty, responding to current and expected labor market changes (such as AI and automation replacing low-wage jobs), and simplifying our complex and poorly integrated system of income transfers (including refundable ones), such as tax credits GST / HST credit and the Canada Employee Benefits, and programs such as social assistance and disability benefits) to provide more universal income support.
What would a universal basic income cost and how would it be financed?
There is no doubt that UBI would be an expensive program to implement. However, the cost depends on how much the recipients are paid, whether (and what amount) the benefit is reclaimed with employment (or other) income, and what existing programs to fund UBI are being cut or canceled.