PLANS for a Universal Basic Income could “penalise some low and average income workers while benefiting the already well-off,” according to a report from a new group of SNP members.
The Progressive Policy Research Group also warn that the plans could be a “major disincentive to immigration, as migrants could face much higher tax bills while not receiving UBI until establishing permanent residency.”
The comments come in response to a call for evidence by the SNP’s Social Justice and Fairness Commission.
The coronavirus pandemic has re-ignited the debate on a UBI which would see all UK citizens – regardless of their income – handed a cash payment either yearly or monthly.
The Scottish Government has previously funded schemes to examine pilots in four local authorities – Fife, Edinburgh, Glasgow and North Ayrshire – but has limited powers to introduce the policy in Scotland currently as some key income tax and welfare powers are reserved.
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In their paper, the PPRG say that while they support “many of the principles of a UBI” it would “require a dramatic reform of the tax system that could in many instances be regressive.”
The warn that a UBI including a generous child payment “would in many instances be a direct transfer of income from low-earning workers to well-off families. “
They call on the Commission to consider “a broader definition of ‘basic income’ than a UBI requiring a universal payment. “
On immigration, they say if there is a minimum period of legal residency before becoming eligible for payments, new migrants to Scotland would face a significantly higher tax burden than at present but without the mitigation of receiving a UBI payment.
“In practice, this means that the introduction of a UBI could become a major disincentive to immigration as migrants would not initially benefit from the payment itself.
“With migration absolutely central to Scotland’s long-run economic prospects this aspect alone should raise serious concerns over such an approach. “
Instead, they call on the commission to consider either a minimum income delivered through the welfare system, or a negative income tax, which would be delivered through the tax system.
Group member Dan Paris said: "Universal Basic Income has become one of the most exciting political ideas of our time, and enthusiasm for the idea has grown due to Covid.
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"But the scale of changes required to implement UBI are enormous, and potentially regressive.
"As our analysis shows, the combination of changes to tax and welfare could in fact penalise some low- and average-income workers while benefiting the already well-off.
"And there is a serious danger that such a system could act as a major disincentive to immigration, as migrants could face much higher tax bills while not receiving UBI until establishing permanent residency.
"There are ways to fix these problems. An alternative would be to set a basic income delivered through either welfare payments or tax credits to those falling beneath a defined income floor, rather than automatically making payments to every individual.
"An independent Scotland would have the powers to create a fairer and more equal society - and it's essential that we get these ideas right."
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