The latest report from Northern Policy Institutes Basic Income Guarantee series argues there are a number of advantages and challenges to using the personal income tax system to deliver a basic income guarantee in Ontario.
As author Lindsay Tedds points out, our current tax system is not just used to raise revenue; it has become an increasingly important instrument for delivering income support. Many, including Hugh Segal, special adviser for the Ontario Basic Income Pilot, have suggested the Canada Revenue Agency could play a natural role in the administration of a basic income program.
The report, titled Implementing a Basic Income Guarantee Through the Personal Tax System: Benefits, Barriers and Bothers, explores this idea in more detail, initially highlighting the value of using the tax system to implement a basic income guarantee.
According to Tedds, using the tax system could simplify a very complex, often overlapping process for recipients of social benefits, while at the same time reduce administrative costs. Additionally, the tax system already has the tools to deliver a basic income guarantee namely, through refundable tax credits.
But while Tedds acknowledges advantages to having a single administrative structure for social assistance, "it is important to remember that Canadas tax system is itself complex, intimidating, and not easy to navigate especially for those who may require a BIG the most, he writes. Along with the benefits "there are also a number of challenges."
The report suggests income accuracy and Canadas harmonized tax system could prove to be the most significant hurdles to in delivering basic income in this way.
Any basic income would have to be funded through tax revenues and/or clawbacks, both of which depend on the accuracy of the income reported.
Tedds also outlines various ways in which inaccurate income reporting occurs in Ontario.
Another formidable challenge to using the tax system for a basic income guarantee is Canadas harmonized tax system.
Provinces are bound by tax-collection agreements which restrict their flexibility in designing tax programs. Those wishing to make significant changes are required to receive approvals from other provincial and territorial governments, along with the federal government which requires a high degree of partnership and collaboration.
Finally, although the tax system could provide a basic income through cash transfers, the Canada Revenue Agency is not equipped to provide the many other services that are important to low-income social welfare recipients like employment supports and referrals to other agencies, Tedds notes.
Addressing these implementation details, in fact, would be linked to both the policy and objectives of a basic income guarantee," the author concludes. "Such issues could be solved, if not easily, but they would require real effort, discussion and the maturity of all the players involved.
The paper is the fourth of a series that explores the various topics presented at NPIs Basic Income Guarantee conference last October. Report topics include food insecurity issues, potential models for a BIG pilot, tax implications, and the potential impact on social innovators and First Nations.
To read the full report, visit http://www.northernpolicy.ca.
To view presentations from the NPIs BIG conference and explore comments and feedback from participants, visit http://www.northernpolicy.ca/big.
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