Alberta could implement guaranteed basic income with no major new funding needed: report
Sarah Rieger | May 1, 2019
Topic category: The Basics of UBI

Alberta could reduce poverty and introduce a guaranteed basic income with virtually no new funding by simply tweaking how it issues tax credits, according to a new report.

"Converting just a few non-refundable tax credits into refundable ones can produce a guaranteed annual income of over $6,000 for a single-adult family and over $9,000 for a two-adult family, with no significant new funding required," the report from Wayne Simpson and Harvey Stevens at the University of Calgary's School of Public Policy reads.

"This would improve supports for 37 per cent of Alberta families, with the largest gains properly concentrated among the poorest households, and would reduce the rate and depth of poverty by 25 per cent."

A basic income isn't a new idea — it's been tested in small pilot projects in Canada dating back to the 1970s, but critics have often worried costs to implement and run such a program would be prohibitive.

But this report's authors say they've found a way around that.

The report says Alberta's poverty rate has not fallen in line with its economic growth, and that its poverty rate has largely stabilized.

But, the authors write, Alberta's growth has resulted in a generous system of non-refundable personal tax credits that could be reformed to create a basic income program.

By eliminating six non-refundable tax credits including the basic income tax credit and credits for pension income and student loans, the province would have a total of $5.4 billion to finance a guaranteed basic income, the report found.

That could pay for a guaranteed annual income of $6,389 for a single-adult family, and $9,035 for a two-adult family. It said 37 per cent of families would benefit from the guaranteed income, with the highest gains among lowest-income Albertans.

Federal collaboration would make big difference

Where the province would see an even more significant impact would be if it could persuade the federal government to combine a similar federal approach, by eliminating the federal GST credit.

That would create a total budget of $11.4 billion — $13,674 for a single-adult family and $19,338 for a two-adult family.

That would see Alberta's poverty rate drop by 44 per cent, and be completely eliminated for couples.

Poverty reduction isn't the only benefit, the authors said, although it's the main one they looked at.

"A [guaranteed basic income] is seen as an important component of policy to address the rapid advance of robotics, artificial intelligence and other technologies … which may create widespread job destruction, unemployment and hardship within a short timeframe," the report reads.

It doesn't appear likely a basic income pilot projects is in the cards for Alberta anytime soon. During the recent provincial election, the only party that pledged to test the initiative in its platform were the Alberta Liberals, who failed to gain a seat.

Tags: Alberta, Social Sharing, Tax Credits,
comments powered by Disqus
Read about Canada's exploration of UBI. Brought to you by The Fund for Humanity.
READ: Universal basic income 'would cost less than value of benefit cuts since 2010'.

The government could make tax-free payments of £60 to every adult, £175 for those over 65 and £40 for each child under 18, regardless of other income, in a proposal designed to cut rising levels of poverty and inequality across the country.

The report by the economists Stewart Lansley and Howard Reed, and published by the leftwing thinktank Compass, said that the net cost of reworking the tax and benefits system would be £28bn, a figure less than the aggregate cuts to welfare since the Conservatives came to power in 2010.

The changes would return social security spending back to the level of a decade ago to help cover the costs of the UBI, alongside what the economists said would be some modest increases in income tax for higher-paid workers.

The report comes a week after the launch of a similar plan from the New Economics Foundation (NEF) thinktank was welcomed by the shadow chancellor, John McDonnell, in a signal of the growing interest in UBI, and as economists increasingly look at ways to finance a basic income proposal.

Under the NEF proposal, the tax-free personal allowance would be scrapped and the proceeds used to fund a flat payment of £48.08 a week for every adult.

There are concerns that UBI systems diminish work incentives, although supporters say they will become increasingly necessary as the rise of the automated economy will put greater numbers of workers’ jobs at risk.

Economists’ report follows plan from New Economics Foundation in backing proposal
Canada and the Changing Nature of Work

– creating a global digital marketplace for labour. An estimated 48 million workers were registered on online work platforms globally in 2013.1 The market is estimated to be growing at 33% annually, with the number of workers expected to reach 112 million and market revenue to hit US$ 4.8 billion in 2015.2 The advent of virtual work could profoundly reshape the nature of work in Canada, transforming how, when, where and what type of work is done. This in turn could challenge the underpinnings of Canadian social policy and programs such as employment insurance (EI) and the Canada Pension Plan (CPP).

One of the more disruptive features of the emerging digital economy is the rise of virtual workers.
WATCH THE VIDEO: The Basic Income Debate

The UBI Debate

The Agenda analyzes the merits of this alternative approach to traditional social assistance.

Debating the merits of Ontario going down the path to UBI. Is it a simpler, better path to poverty reduction, or an unsustainable program?

Alberta mayors back guaranteed minimum income

In light of the NDP’s sweeping victory in Alberta, Calgary mayor Naheed Nenshi told reporters that he’s interested to see if the province’s new finance minister, anti-poverty activist Joe Ceci, supports guaranteed minimum income in the form of a “negative income tax.”

“I am really, really interested if he will bring that to bear in terms of some really significant changes to the taxation system that would really help us manage poverty in a brand new way,” Nenshi told reporters in Alberta.

A negative income tax does exactly the opposite of what you expect a tax to do: it pays workers who make below a certain amount a stipend to help “top up” their income.

It’s just one of ways that economists and policy analysts have discussed implementing some sort of minimum guaranteed income. Currently, low-income Canadians get assistance from a host of programs and agencies managed across levels of government, such as minimum wage, community housing, child benefits and Ontario Works.

But what if governments got rid of all these programs?

What if the poor were just promised a basic income?

Mayors from both Edmonton and Calgary came out in support of some kind of basic income guarantee, or mincome, as it’s sometimes called.