“Would we rather have tax breaks for wealthy Canadians, or dignity and security for low-income Canadians and the middle class?” Sheila Regehr, Basic Income Canada Network
Basic income (BI) schemes are a political and social issue. BI addresses inequality and could help to eliminate poverty. Doug Ford cancelled the Ontario BI Pilot program.
On January 23rd, the Basic Income Canada Network (BICN) released its “Basic Income: Some Policy Options for Canada” report. The researchers were Chandra Pasma and Sheila Regehr.
The BICN report describes BI as: “A basic income is an unconditional cash transfer from government to individuals to enable everyone to meet their basic needs, participate in society and live with dignity, regardless of work status.”
According to the BICN report, a BI unconditional stipend for adults 18 and older would cost between $134 Billion and $637 Billion. Depending on three different proposed options.
The report chose a $22,000 BI amount for individuals because that’s Statistics Canada’s Low-Income Measure after taxes. BICN used Statistics Canada’s Social Policy Simulation Database and Model to provide the report’s analysis.
Of the three BI options, it ties the first two to an income test. Middle and higher incomes would not receive any money or a clawed back amount.
Option 1: only the 18-64-year-olds, a maximum of $22,000 for individuals and $33,113 for couples with an income test. No change to seniors who keep both Old Age Security (OAS) and Guaranteed Income Supplement (GIS). Approximate cost of $134 Billion.
Option 2: All adults and seniors receive money with an income test. OAS and GIS discontinued and funds go towards BI. Approximate cost of $187 Billion.
Option 3: No income test. Everyone over 18 years old receives the same amount regardless of income. Approximate cost of $637 Billion.
The report converts money from GST/HST credits and provincial social assistance programs such as Ontario Works into the BI program. Those conversions would not be enough to pay for it. The government needs to increase taxes for both wealthy corporations and individuals, end income-splitting for seniors, and for higher-income individuals it would eliminate some tax credits which favour them.
Some BI costs could be offset in saving money on public health and criminal justice. The theory is people will eat better food to be healthier, and fewer crimes because people have more money and less inclination to steal. There is no solid data to back up those assumptions.
Who benefits from BI? Anyone earning below $47,000 sees an increase in their income across all three options. The middle-class as defined by incomes between $36,000 and $79,000 are all better off or the same depending on other tax benefits.
Who loses from a BI scheme? People earning over $148,000 will have an increased level of income tax under all three options.
The main argument against BI, is its not free money. Taxes pay for it. However, the current tax system gives away $122 billion annually to middle and high-income individuals. Closing those tax loopholes would almost pay for Option 1 in the BICN report.
Doug Ford cancelled the Ontario BI Pilot program in 2018 after promising on the campaign trail to allow the pilot program to finish. Early results showed how it improved recipients’ quality of life.
The pilot paid $17,000 to each participant helping to lift them out of poverty. To implement a national $17,000 BI, the annual cost would be $76 billion.
Michael Coteau, MPP for Don Valley East and former cabinet minister in the Wynne Liberal government will restart Ontario’s BI Pilot if elected Premier in the next provincial election. Presently, the leaderless Liberals are on track for a majority government with 71 seats if an Ontario election happened today.
Talking about BI, Michael Coteau said, “It was a shame to cancel that research that was being conducted…Everything is changing so drastically around us that understanding the basic income and being ahead of the game of other jurisdictions in understanding the concept of basic income and how it is being used to mitigate some of the disruption that may occur with the change in economy…in the long term by putting the money in the hands of people versus systems. I was a big supporter of it and, if I was elected premier of Ontario, I would reinstate that project and expand it for research purposes.”
Is BI just socialism with another name?
Canada already has BI schemes for children and seniors. The government does not call it BI. For children, the federal government has the Canada Child Benefit. For seniors, there are Old Age Security, Guaranteed Income Supplement, and the Canadian Pension Plan. All could be considered a form of BI.
A favourite economist of libertarians and conservatives and a Nobel laureate Milton Friedman was an ardent supporter of BI. Friedman advocated for open free markets without government interference. Yet, he felt BI was the best way to lift people out of poverty.
Prominent poverty advocate John Clarke of the Ontario Coalition Against Poverty (OCAP) said, “The problem with notions of a progressive basic income is that they assume their version is likely to be adopted. In the prevailing context of austerity and privatization, the policy will be used to commodify social provision, ensuring a meagre cash payment replaces, rather than augments, existing public services. This cash payment would also be used as a de facto wage subsidy to low paying employers, depressing wages and blocking increases in the minimum wage. It’s a case of the road to neoliberalism being paved with good intentions.”
The Sault does not produce many well-paid middle-class jobs. Most of the well-paid jobs that do exist go unfilled, such as doctors and nurses. Middle-class jobs being proposed come with possible negative consequences such as the ferrochrome plant.
The big job announcement this month was Giant Tiger. Few if any middle-class jobs would be generated from Giant Tiger. The Sault mainly creates low-income jobs.
For low household income cities such as the Sault. A BI would inject much needed financial stimulus into the local community. Unfortunately, Doug Ford stopped the Ontario BI trial. Ontario could have been at the forefront of creating an equitable society that works for all.