What is basic income and how would it affect me?

MPs are considering a pair of bills aimed at lifting people out of poverty through a basic income program, but some fear such systems could result in more taxes for Canadians already struggling financially. .

Senator Kim Pate and NDP MP Leah Gazan introduced Bills S-233 and C-223, respectively, in an attempt to create the first national framework that provides everyone over the age of 17 across Canada, including temporary workers, permanent residents and asylum seekers, a decent and guaranteed basic income. The bills contain the same proposal.

Pate said they created two bills with the same language to increase the chances that at least one of them would pass the Senate or House of Commons.

“MP Leah Gazan and I wanted to provide the opportunity for both Houses to study the bill simultaneously,” the senator said in an email to CTVNews.ca.

In the Senate, Bill S-233 passed second reading and is under review. The parliamentarians debated Bill C-223 in the House of Commons this week.

As these bills come under scrutiny, CTVNews.ca asked some experts how a basic income program could affect workers and business owners in Canada.

What is basic income?

basic income It’s an unconditional payment that the government provides to people on a regular basis, according to Coalition Canada, a national network of basic income advocates.

“It ensures that everyone can meet their basic needs and live with dignity regardless of their employment status,” the group says on its website.

There are several types of basic income programs.

One approach, called universal basic income, gives a set amount to everyone, each month, regardless of their income, said Jim Dunn, a professor of health, aging and society at McMaster University in Hamilton, Ont., in a video interview with CTVNews. .AC.

In this case, even those who are already millionaires could receive the same amount of money per month as middle-class or low-income residents, and they do not have to apply.

Another type of basic income program is a negative income tax, which is more complicated to administer than universal basic income, Dunn said. An example is the Ontario Basic Income Pilot Project.

“Basically, they set an income threshold that everyone is going to reach, and what you earn in the labor market or on social assistance, they supplement that to get to that amount,” said Dunn, who co-led the Income Pilot evaluation. Ontario basic program, which was canceled before it was completed.

To be eligible, participants must be below the threshold, which for the Ontario pilot was $16,989 per year for an individual.

In both cases, the government would provide the money and observers expect that workers would pay more taxes since they would earn more.

How would it affect workers?

Dunn believes that income programs benefit both workers and businesses.

He said basic income programs can help workers find time to look for the right job, leave an unhealthy relationship, pay for medical care not covered by public health insurance and generally improve their lives.

“Sometimes money allows them to afford transportation that they otherwise wouldn’t be able to afford to get to a job,” Dunn added.

Not only will low-income workers and people who are unemployed or underemployed no longer depend on welfare, but they will also be incentivized to work longer hours and thus earn more money, he explained.

Those who receive welfare have less incentive to do so because they can regain their benefits if they exceed the income limit set by the government, he said.

Earning more on basic income would lead to more taxes, but Dunn argued there are benefits too. If more people work and earn more, the government will have more tax revenue that can be spent on more services and programs, benefiting everyone, she said.

“Sure they will pay more taxes, but they will still have more money to spend and enjoy a better lifestyle,” Dunn said.

Having enough income can help people solve other problems in their lives, he added.

“There are examples of people leaving bad relationships… because they now have the financial security to do so,” he said.

How will it affect business owners and the economy?

In Dunn’s opinion, the positive effect on workers will extend to companies.

People with lower incomes tend to have precarious jobs with irregular working hours, high stress and other health and safety problems.

With basic income, workers and companies will feel “more secure” and “more productive,” he said.

Fewer employees will be absent from work and workplaces will be more productive because people on basic incomes won’t have to deal with the stress that comes with poverty and juggling a second job, he said.

But Franco Terrazzano, federal director of the Canadian Taxpayers Federation, says a basic income program would result in tax increases and would be “disastrous” for the Canadian economy.

“The specific tax will depend on what the government decides,” Terrazzano said in an email to CTVNews.ca. “But it would mean higher taxes to pay for this enormously expensive program.”

He fears that companies will also face other challenges. “It would also make it harder for Canadian companies to find and retain talent because if the government pays people not to work, fewer people will work.”

Based on Ontario’s basic income pilot project, the Parliamentary Budget Officer estimated that the basic gross cost of guaranteed basic income nationally it would range between $30.5 billion and $71.4 billion from November 2020 to March 2021, Terrazzano said.

John Oakey, vice-president of tax at Chartered Professional Accountants of Canada in Dartmouth, N.S., wonders how the government could afford such a costly program.

“The problem with implementing it is that there is a consequence,” Oakey said in a video interview with CTVNews.ca. “If universal basic income is introduced, which would be a government expense, the government would have to finance it and pay for it somehow. Either it will continue to run deficits to finance that along with all the other programs, or “It would have to raise taxes to avoid incurring into additional deficits to finance this, or would have to reduce existing spending.”

He said income taxes would be the main source of financing federal government expenditures.

Canada’s experience with the Canada Emergency Response Benefit, which contributed to significantly increasing the country’s debt, may indicate what a basic income program could look like, Oakey said.

The program provided financial support to workers who lost income due to the pandemic, but it was always short-term.

Since the time it was implemented, many Canadians have told stories of how they were asked to repay thousands of dollars as a result – money they say they do not have.

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