A new study by the Taxpayers’ Union has rubbished a Universal Basic Income (UBI), which the Labour Party is investigating.
A discussion paper from Labour raised the possibility of a UBI, where every adult New Zealander would receive $11,000 a year ($211 a week) in exchange for scrapping many current welfare payments.
To understand how daft this is, consider this.
At the last election Labour said the age of eligibility for superannuation is too low at age 65 and should go to age 67 (they’re right).
What they are now “floating” is to decrease the age of eligibility for superannuation from 65 to 18!!!
The Taxpayers’ Union has come out swinging at the idea, saying its study shows the introduction of a UBI would mean record-high tax rates, and potentially result in another recession.
Executive director Jordan Williams said it was “startling” that Labour was floating the idea as it would make the most vulnerable in society worse off because higher taxes would reduce incentives for work and economic growth.
“If you take Labour’s assurances that no one will be left worse off under their UBI, the amount would need to be so high that Treasury’s economic modelling suggests a flat income tax of between 50.6 per cent and 55.7 per cent would be needed to pay for it.”
The only way a UBI could come even close to affordable would be if it is was set at a level much lower than people on welfare currently get. And can you imagine Labour cutting the pension of every retired New Zealander?
Labour’s finance spokesman, Grant Robertson, said the party did not have a policy to introduce a UBI, but was “investigating a range of options” to ensure New Zealanders have income security.
Yeah, investigating allowing people to get superannuation from age 18!
“We are following the debate on UBI with interest, but we do not regard the Taxpayers’ Union as either credible or independent commentators on this matter or many others,” he said.
Claims that taxes would soar to more than 50 per cent were incorrect.
They’re not. Unless you introduced new taxes such as capital gains, that is what you would need to fund a UBI at the level of NZ Superannuation.
The study also addressed Gareth Morgan’s theory of a UBI, which he proposed in his book The Big Kahuna.
The study said Morgan’s idea would cost $10 billion more than the current welfare system.
Morgan, who had not seen the study, said claims it would cost that much were “ridiculous”.
Introducing a UBI would have to be part of a larger overhaul of the tax system, he said.
Morgan’s website makes very clear that a UBI could not be funded out of current taxes and would need both higher marginal tax rates on lower paid workers and a capital gains tax.
The NZTU report will be on the website later today.
UPDATE: It is here.