Developing a costing for a basic income is not a neutral exercise

Posted on July 27, 2021 in Social Security Policy Context

Source: — Authors: , – Publications
10/06/2021.   By Mohy Tabbara, Garima Talwar Kapoor

This policy brief provides a summary and analysis of the Office of the Parliamentary Budget Officer’s (OPBO) report, Distributional and Fiscal Analysis of a National Guaranteed Basic Income. Our analysis offers an overview of the OPBO’s report and an examination of some of the shortcomings of the OPBO’s costing. The following is the upshot of our analysis:

  • Proponents of a basic income often contend that a basic income could help reduce poverty, stabilize incomes, and simplify the complex web of benefits and programs available to people across Canada. The OPBO’s mix of parameters and offsets helps to achieve a goal of reducing poverty, but it does not do so equitably and would come at a significant cost to many of Canada’s working poor.
  • Implementing a basic income program requires a clear and transparent conversation about potential offsets and their consequences. Without making explicit the rationale behind certain offsets when developing the cost estimates, the OPBO report creates the perception that the viability of a basic income is dependent on cost, and that offsets can be readily identified.
  • Our analysis of the OPBO’s report demonstrates that the costing of such a basic income program is not neutral—it is fraught with many decisions that could lead to negative consequences for some of the very people a basic income program is intended to serve.
  • The criteria the OPBO uses to select its offsets are unclear, and by its own estimates would lead to lower total incomes among Canada’s working poor. This is paradoxical to some of the reasons why people call for a basic income.
    • The OPBO also uses the basic income disability amount to justify eliminating many disability-focused credits, including the disability tax credit, caregiver tax credits, medical expenses tax credits, and workers’ compensation benefits. While the added $6,000 a year would be beneficial, it assumes a homogeneity of need and exposes people with disabilities to market rates for necessities.
    • While the suggested model would decrease the poverty rate overall, this hides the fact that it would lower total incomes among the working poor. It would also reduce services provided to low-income people in Canada, supports for people with disabilities, and access to benefits and supports that cannot be replaced simply with a cheque.
  • If the goal is to increase supports to those living in deep poverty, we can achieve that goal without a basic income program. Creating income floors for everyone in Canada is necessary and desirable, but basic income and income floor are not synonymous. Targeted increases or new supports for working-age adults in poverty would help address the needs for this group without creating the other unintended consequences outlined in our analysis. Expanding and improving social assistance, increases in targeted tax credits and benefits, strengthening Employment Insurance, stronger labour standards, and investments in public services would be less costly, more effective, and have fewer negative consequences than the suggested basic income.

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Developing a costing for a basic income is not a neutral exercise

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