Workers would face 40pc tax on pay to fund new universal basic income

Workers could have their wages taxed at 40pc to pay for a new universal basic income under proposals examined in a report today.

esearch by the ESRI reveals that rolling out a payment worth €1,200 a month per person, regardless of their income, would cost almost €50bn. The report says a universal basic income would be an unconditional payment that is made regularly to everyone over 18 and would be “sufficient to live on”.

It would not be means-tested and people would not have to work to get it.

The report says recent policy proposals to afford such a scheme would mean replacing the lower 20pc rate of tax with the higher 40pc rate.

It notes this is put forward in a Green Party plan that would also mean tax credits are scrapped.

Previously it was estimated that an income tax rate of 50pc or 60pc would be needed under proposals put forward in the 1990s to finance such a scheme. The report says the introduction of a basic income for all would require substantial changes to the tax and welfare system.

It adds that a pilot study and more analysis would give further evidence on the wider impact of implementing a full roll-out in Ireland.

“Assuming it is paid to every individual aged over 18 in Ireland, a universal basic income set at 60pc of median income in 2019 equates to a monthly payment of €1,200 per person and would have a gross cost of just under €50bn per annum,” says the ESRI report, which was funded by the Low Pay Commission.

To put this in context, it says, total spending on all social welfare programmes in 2019 was €20.9bn.

The report looks at other scenarios including a universal basic income equal to 50pc of median income, or €1,000 per person, which would cost €41bn.

The cost of a universal income at the current social welfare rate of €208 a week would be €37bn.

For €10bn a year, individuals would end up with a €243 a month payment.

The report lists a number of benefits from setting up a universal basic income.

They include an end to the complex administration of means-testing and the stigma associated with welfare payments.

It would give more financial security, it says and would avoid situations where people are discouraged from taking up paid work due to the risk of losing means-tested welfare payments.

The report says it would give people the financial freedom to leave insecure or exploitative work for other jobs.

Those on higher incomes would pay more tax at the 40pc rate as their total income, including the universal income portion, would be counted.

Among the drawbacks are the fact that it does not “proportionately” target funds to those most in need as everyone gets it regardless of their income.

The report raises concerns that it could lead to some people withdrawing from the labour market.

It says it could likely lead to some low-income households being financially worse off, and this would require a supplementary welfare top-up.

“Regardless of the type of universal basic income you’re thinking about, it would be very costly and require profound changes to taxes and the welfare system,” said Dr Paul Redmond, senior research officer at the ESRI and one of the report’s authors.

He said the concept receives a lot of attention in public debate but very little is known about the impact of such a ­policy.

Source link

Denial of responsibility! galaxyconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave A Reply

Your email address will not be published.