Universal basic income program could cut poverty up to 40%: Budget watchdog
The Parliamentary Budget Office (PBO) has released a new report highlighting the potential benefits of a guaranteed basic income program at the federal level in Canada. According to the report, such a program could reduce poverty rates in the country by up to 40 per cent.
The PBO estimates that a Canadian family in the lowest earning group could receive an average of $6,100 in annual disposable income through the implementation of a basic income program. However, higher earners may see a decrease in their income due to changes in the tax system needed to support the program.
The cost of introducing a federal basic income program is projected to be around $107 billion in 2025. The PBO also anticipates that other social supports may need to be cut in order to fund the basic income program, resulting in a net cost to the federal government of between $3.6 billion and $5 billion, depending on the specific model and family definition used.
The PBO’s analysis is based on Ontario’s 2017 basic income pilot project and focuses on the nuclear family unit, which includes an individual, their spouse or common-law partner, and their children under 18 years old. However, the report acknowledges that this definition has limitations, as one dwelling can house multiple nuclear families if older generations or adult children are living there.
In addition to the nuclear family model, the report also considers an “economic family” definition, which includes all relations by blood, marriage, or adoption living in the same dwelling. This definition could reduce the cost of administering the program by more than half, to $53 billion in 2025, before factoring in changes to the tax system or social supports.
The impact of the basic income program on poverty rates is expected to be greater under the economic family definition, with a 40 per cent reduction compared to 34 per cent under the nuclear family model. The report suggests that the economic definition is more cost-effective and leads to a lower tax burden overall for Canadians.
Despite the potential benefits of a basic income program, the PBO’s analysis predicts a more modest impact on poverty rates than in its previous report from 2021. The report attributes this reduction to the fact that the wages of lower-earning Canadians are not keeping pace with the rising cost of living, leading to more families classified as living in poverty.
Provincially, Manitoba is projected to see the highest reduction in poverty rates under the economic family definition, followed by Quebec and British Columbia. Efforts to establish a basic national income in Canada have faced challenges, with a pilot program for older adults in Newfoundland and Labrador seeing low registration numbers.
In the political arena, the NDP has pushed for a guaranteed livable basic income through a private member’s bill that did not pass in the House of Commons. A similar bill is currently in limbo in the Senate. Liberal Party leadership candidate Karina Gould has pledged to begin the process of establishing a basic personal income within a year if elected.
Overall, the PBO’s report underscores the potential benefits of a federal basic income program in reducing poverty rates in Canada, but also highlights the challenges and complexities involved in implementing such a program. The discussion around basic income continues to evolve in Canada, with ongoing debates and proposals at both the federal and provincial levels.
