UBI proponent says it would need $10b of tax hikes to pay for it

NBR reports:

A universal minimum income scheme to replace the welfare system would have to be preceded by tax reform and would also need to be phased in over a very long timeframe, economist Susan Guthrie says.

The Labour Party is looking at the concept, which it may adopt as one of its policy planks.

Co-author with Gareth Morgan of a book on the concept, The Big Kahuna, Ms Guthrie, who has previously worked at the Treasury and the Reserve Bank, says such a policy would also need broad agreement across the political spectrum. …

A lot of the right-wing opposition to the concept is coming from people worried about how much such a policy would cost, Ms Guthrie says.

So reforming the tax base would need to happen first.

“Quite separate conversations are being held around the world right now that actually tax bases are pretty loopy and holey and, as a separate issue, let’s close those.”

Ms Guthrie estimates such reforms would generate about $8-9 billion a year in extra taxes – about the same amount critics of the universal minimum income concept have said would be needed over and above the cost savings from dismantling the welfare bureaucracy.

So you need to tax NZers an extra $10 billion a year to pay for this UBI. And this is an UBI that would not be smaller than current NZ Super. So for 20 years or so you’d be paying NZ Super and UBI which means the gap in funding would be far greater than $10 billion.