Canada can afford to eliminate poverty, support the middle class and dramatically shrink the gap between the rich and poor by introducing an annual basic income of $22,000, according to a new report.
The unconditional stipend for adults over 18 would come with an annual price tag of between $134 billion and $637 billion, depending on three options explored by the Basic Income Canada Network in a report being released Thursday.
Everyone would be impacted because it would change the tax system, according to the non-profit advocacy organization. And although some would take a hit, it would result in a tax system that is fairer, more transparent and easier to understand, the report argues.
“Basic income in Canada is not a question of possibilities, but of priorities,” said the report’s co-author Sheila Regehr, chair of the network.
“It is clear from child and seniors’ benefits that basic income works for many Canadians already. The federal government’s priority now must be to take leadership to make it work for everybody,” she said.
Under all options, the report proposes converting GST/HST credits and a portion of provincial social assistance payments into a basic income. The new benefit would be topped up by increasing corporate and personal taxes, ending income-splitting for seniors and eliminating many tax credits that disproportionately advantage higher-income residents.
“All this money goes back to all Canadians in a fairer, more transparent way through a basic income that is better for everyone and the economy,” Regehr said.
Downstream savings in public health and criminal justice as well as increased economic productivity due to a basic income could help offset the cost, she added.
While seniors may object to losing Old Age Security (OAS), the Guaranteed Income Supplement (GIS) and the benefit of income splitting, the report notes “there is an argument to be made on the grounds of fairness that it is better to target money to low-income seniors than to higher-income seniors.”
The report acknowledges that argument may be difficult to sell politically “as recent policy proposals have demonstrated, proposing even minor variances to OAS/GIS can create a public backlash.”
But Regehr says people should consider what is more important.
“Would we rather have tax breaks for wealthy Canadians, or dignity and security for low-income Canadians and the middle class?” she asked.
“I don’t even know what middle class means anymore,” she added. “Because without security, where does that sense of middle class come from?”
Queen’s University professor emeritus Robin Boadway, who has also published research on how to pay for a basic income by rejigging the income tax system, said the network’s report “goes one step further” by looking to recoup costs primarily from wealthier Canadians.
In 2018, before Ontario’s Ford government pulled the plug on a provincial experiment with basic income that paid individuals about $17,000 annually, the federal Parliamentary Budget Officer estimated it would cost more than $76 billion a year to provide a similar national, guaranteed minimum income. The net cost to Ottawa would be about $43 billion after rolling in existing federal programs for the poor.
The cost is lower than the network’s proposal because Ontario’s version was less generous.
“A lot of people dismiss the concept of a basic income solely on the basis of cost, saying it’s just not feasible,” said Evelyn Forget, a University of Manitoba professor who studied that province’s 1970s trial of a basic income in the town of Dauphin.