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Justice Commission, Conference of Religious of Ireland
How feasible it is that everyone in the country receive a basic income which has no strings attached and no stipulation that they must remain inactive and unemployed? Where would the money come from, who would gain, would anyone loose out? The thinking behind the basic income idea and the principles which drive it, along with the logistics of how it is possible, are clearly outlined in this article.
Ireland is performing very well economically. All the signals are that the country will comfortably meet the Maastricht criteria; quite an achievement for one of the EU's smaller, less developed and peripheral locations. Tremendous work has been put into increasing the numbers in employment. Interest rates and inflation rates are very low. Homeowners are watching their properties achieve extraordinary growth, especially in Dublin and the other cities. Economic figures are so good, that big tax cuts have been granted. There is a general 'feel good' factor pervading the country.
Ireland's present economic boom is, however, working only for the section of the population that has a job, is educated, owns a house, or has the skills wanted by foreign companies looking to set up here.
Ireland also has a poverty problem that has been increasing over the last 20 years, and the pattern is set to continue in the years ahead. Over 100,000 people in Ireland are long-term unemployed who cannot participate in Ireland's economic growth. The fact that we have a serious poverty problem and yet view ourselves as increasingly prosperous as a nation is a contradiction. It's time this contradiction was resolved.
The present welfare system
The present welfare system was introduced at a time of full employment. It was brought in to get people over a fallow period between jobs or when they were sick. It was never intended as a permanent source of income. The social welfare payments to unemployed people are below the poverty line. Social welfare is paid on the condition that people remain idle; inspectors are paid to ensure unemployed people remain idle. This forces these members of society to get caught in an unemployment trap and a poverty trap. They are afraid to look for work because they risk losing their only source of income: welfare. It produces in these members of society alienation, frustration, and marginalisation. Society as a whole is deprived of the creativity, insights, skills, and talents of these members.
An alternative model needed
The failure to tackle this problem is not caused by a lack of good will among Irish people. Rather it resides in the model of society that is being followed. The present model sees meaningful work and adequate income being made available to all Irish people through the provision of full time jobs for all who seek them, with reasonable wages paid for these jobs, and people's income being complemented by adequate social insurance. This model has not worked, as evidenced by widespread poverty and high unemployment.
An alternative model that is more radical and imaginative is required. The CORI Justice Commission has proposed an alternative model called a Basic Income System (BIS). This model would replace social welfare and organise the distribution of resources. Recent studies have shown that this alternative is viable for the Republic of Ireland now.
How does the Basic Income System model work and who does it affect?
The Basic Income System is realistic, well-researched, and achievable. Moreover, it benefits all of society: the poor, women, employers, farmers, businesses and corporations, and people who are well off in the following ways:
· It would guarantee an income above the poverty line for everyone; it is not means tested.
· It is paid without conditions. It does not require the performance of any work or the willingness to accept a job if offered one, so it eliminates poverty traps and unemployment traps.
· It is paid to individuals rather than households.
· It is paid irrespective of any income from other sources; it is work friendly.
· It allows a person to take up employment without fear of losing entitlements or benefits.
· It is always tax free.
· There would be no signing on and no restrictions or conditions.
· It recognizes the right of every person to a share of the resources of society.
· It ensures that looking for work and earning an income or increasing one's income while at work is always worth pursuing, because for every pound earned the person will retain a large part.
· It promotes equality since it treats every person equally.
· It abolishes the concept of dependent adults.
· It spreads the burden of taxation more equitably.
· It treats men and women equally, because the amount paid would depend on the person's age, not on gender.
· It is simple and transparent.
· It is efficient in labour-market terms.
· It rewards types of work in the social economy that the market economy often ignores e.g., household work, child rearing.
· It facilitates further education and training in the labour force.
· It faces up to the changes in the global economy.
· It restores self-esteem and broadens people's horizons by enabling people to seek out work and be successful at getting a job.
· It would be paid every week through a bank, post office, building society, or credit union account, as directed by the person receiving the payment.
· Each adult would get an individualized payment (it is not affected by marital status), while payments to children would go to the caring adult.
· Since every citizen rich and poor would receive the Basic Income, it would remove the social stigma attached to the present social welfare system which is paid only to poor people.
· Employee's PRSI would be eliminated; the tax wedge would be greatly reduced.
· Employer's PRSI would be abolished and replaced by a much lower social solidarity tax of 8%. At 1997 prices, this would save employers £200 million a year.
· Employers would not be in competition with the social welfare system.
· Since employees would not lose their Basic Income when taking up a job, there would always be an incentive to take up employment.
· The Basic Income System would not affect businesses and corporations because the tax structure pertaining to them would continue as is.
· Farmers would be paid a Basic income at the same level as everyone else in society. And they would pay tax on the net income from their farms like every other self-employed person.
· Well-off people can welcome a Basic Income System because this system would improve the quality of life of Irish society as a whole.
How is the Basic Income System calculated?
The Basic Income System would be calculated in the following way:
£ per week (1997)
82 (age 80+0)
77 (age 65-79)
70 (age 21-64)
45 (age 20)
35 (age 19)
25 (age 18)
21 (age 0-17)
An example of a family of two adults and two children living on the dole: "Why should I work for £140 a week (which becomes £71.40 after being taxed at 49%) when it means I'd lose my dole? My dole for myself and my family is £133.90 a week." (This family would also receive Child Benefit payment equivalent to £13.85 per week irrespective of employment status.)
An example of that same family living under the new Basic Income System: They would receive £182 Basic Income and £71.40 from the job. Thus this family would have a total take-home income of £253.40.
How would a Basic Income System be financed?
All personal income would be taxed at one tax rate. What this rate would be would depend on what elements of the current system were maintained. For example, if all tax reliefs were maintained at their present levels, a tax rate of 49% would be required. If tax reliefs were eliminated, however, but all farm income supports were maintained, then a tax rate of 48% would be required to fund the basic income. It is important to remember that the basic income payment itself would never be taxed.
The employee's PRSI and employer's PRSI would be abolished. This would mean a reduction of over £200 million in the payroll taxes employers would have to pay (in 1997 terms).
A Social Responsibility tax at 8% would be introduced for employers. Businesses in particular benefit from the good ordering of society and so have a responsibility to contribute to the welfare of citizens. The Social Responsibility tax is a contribution towards meeting this responsibility. Part of this tax will go to support the Social Solidarity Fund.
The Social Solidarity Fund would be used to ensure that no elderly people were less well off as a result of the change to a Basic Income System. It would ensure that they got optical, dental and aural needs met as at present funded by PRSI. It would generate socially useful work.
The Basic Income System is a model that would improve the quality of life of all of Irish society
The Basic Income System is a model that would improve the quality of life of all of Irish Society. It would help create a more stable society. It would greatly reduce the "dependency culture". It would give people an incentive to improve their economic status. It would alleviate the stress and anxiety of poor people for survival. It has the potential to reduce crime and violence since the stigma of being dependent on social welfare contributes greatly to marginalisation and alienation. Where there is marginalisation and alienation, there is crime and violence. It would free people to develop themselves and their community. It would help parents educate their children and have a vision of a worthwhile future. As more people believe in and have a vision for the future which is desirable and viable, the better life is for everyone.
The principles of CORI's Basic Income System
· Nature and its resources are for the benefit of all.
· Society should provide an adequate income guarantee system to ensure everyone has enough to live with dignity.
· Society should ensure that the basic income is index linked and guaranteed by legislation.
· Society should ensure access to meaningful work for every adult.
· Economic decisions should be equitable and should reduce the gap between the rich and the poor.
· Poverty traps and unemployment traps should be eliminated.
· Tax and social welfare systems should be simple so that state payments are made in a transparent fashion which reduces administration costs, confusion, and the uncertainty regarding take up and withdrawal of benefits.
· Dependency should be reduced.
· Women and men should receive equal treatment.
· Society should be judged on the care it takes of its weakest and most vulnerable.
Shouldn't everyone earn their living?
It is important to remember that there are those who inherit wealth and those who gain from investment even while they sleep. If one believes that human nature is good rather than evil, one would tend to believe that people want to earn a living rather than be dependent. It is the current welfare system that discourages work by withdrawing benefits. The Basic Income System, on the other hand, encourages people to work.
Socially, everyone would gain from the Basic Income System because the quality of life would improve for all. Economically, small groups of people on high or very high incomes would lose slightly. But it should be remembered that the increased growth in the economy is making the payment of a basic income possible without taking from the vast majority of those who already have high incomes. It could reduce the incentive for tax evasion by increasing an unemployed person's ability to raise their economic status and thereby reducing their justification for tax evasion. It could reduce society's tolerance for tax evasion since the justification would be lifted, thereby gaining society's co-operation and support for government in prosecuting offenders.
We need a new system which suits the reality of Ireland today. The status quo is no longer an option.
Summary of the pamphlet "Surfing The Income Net: Basic Income System" by Sean Healy and Brigid Reynolds, published by the Justice Commission, Conference of Religious of Ireland, Milltown Park, Dublin 6. Copies available in bookshops or from the above address.
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