by Stanislas Jourdan | Apr 12, 2016 | News
The French Republic’s main consultative body has announced that it will undertake an assessment of the potential economic impact of introducing a basic income in France.
The Economic, Social and Environmental Council’s (CESE) announcement on March 22nd that it has launched a referral on basic income as a way to “re-start economic activity” marks another major political breakthrough for the basic income movement in France.
The CESE, sometimes called the “third assembly of the Republic,” is a consultative assembly composed of 233 members representing employers associations, trade unions and civil society groups from different social, economic and environmental areas.
The CESE usually publishes reports at the request of the French government or parliament, but it also has the authority to conduct self-initiative reports, as its economic activities section exercised in this instance.
“Maintaining strong economic demand – particularly through consumption – is an essential driver of stability for economic stakeholders.” This, the CESE explains on its website, is one of its main reasons for investigating basic income. Furthermore, the referral emphasizes the fact that high unemployment, poverty and precarity are undermining economic demand: “The fact that a significant – or even growing – part of the households are outside of the production (and therefore consumption) flows is a burden for our economy and a systemic threat.”
The CESE will undertake a two-step study. The first phase will explore the parameters of a basic income policy and provide an overview of the various experiments already carried out.
The second, more ambitious, phase will assess the potential consequences of introducing a basic income on, among other factors, domestic consumption, different sectors of the economy, entrepreneurship, social inclusion, employment and demographics across the regions of France.
Once the rapporteurs of the study are designated, civil society stakeholders will be invited to contribute. The economic committee will then develop and present a report, which will be ultimately voted on in a plenary session by all CESE members. If accepted, the final report will then be presented to the prime minister, the National Assembly and the Senate.
This new development follows an increasing wave of interest towards basic income among the French political class for the past few months.
The French Movement for a Basic Income (MFRB) and the Association for the Introduction of an Existence Income (AIRE) have both declared they will take part in the consultation.
It usually takes three to nine months for the CESE to adopt a report, which means there is a chance that the report will be adopted ahead of the next parliamentary and presidential elections.
Picture CC Jacqueline Poggi
by Tyler Prochazka | Mar 26, 2016 | News
Original Article by Jean-Eric Hyafil
On October 30, 2015, the French Prime Minister Manuel Valls, asked MP Christophe Sirugue to write a report on potential social welfare potential (including the means-tested benefit known as Active Solidarity Income (RSA), and various benefits such as disability pension, elderly people pensions, etc.). The aim is to make the system fairer, more efficient and less complex in order to reduce the number of people eligible to these pensions and benefits but not redeeming them. Mr. Sirugue is due to give out his report by the end of March.
The French Movement for a Basic Income (MFRB) contributed to the report (the contribution in French is available here. The contribution has been written thanks to Robert Cauneau, Public finance expert, and Jean-Eric Hyafil, Economist at Paris I University, Jean-Marie Monnier and Carlo Vercellone, Economics professors at the Sorbonne University.
Given the transformation of labour, particularly due to the digital revolution, we recommend to replace the RSA, a conditional and stigmatizing aid given to individuals in poverty, with a basic income based on the principles of unconditional rights and independence.
Nevertheless, establishing a basic income goes along with deep tax reform, yet taxation is not among the missions attributed to Mr. Sirugue for this report. Indeed, his mission was focused on the reform of minimum social benefits.
A short-term reform of the solidarity income (RSA)
Taking into account the constraint of the Prime Minister’s request, the MFRB first formulated RSA reform proposals which could gradually lead to a basic income. For example:
- remove the mandatory status of job seeker to receive the RSA
- change the rule relative to alimony and as a consequence the principle of subsidiarity
- automate RSA payment to all the legal beneficiaries
- individualize the RSA
- pay the RSA ex-ante in order to suppress activation delays
Implementing these proposals would improve RSA’s efficiency in reducing poverty. Nevertheless, even if each and every proposal were implemented, it appears necessary to formulate a global reform integrating another redistribution mechanism: the income tax. Indeed, the first limitation is related to RSA ex-ante payment; this is possible if undue RSA payments could be directly debited to incomes. But such a process should be integrated to a system that allows for income tax withholding.
The second limitation is related to the RSA individualization. A complete individualization (i.e. payment to a person without income, even if he or she lives with a person with a substantial income) is not possible without changing the way the income tax is calculated for a couple.
A middle term reform of the income tax for an introduction of the basic income
The MFRB formulated a second set of recommendations including various proposals for the implementation of a basic income simultaneously with income tax reform. These proposals could be applied on a midterm basis, along with the creation of a withholding system for the income tax.
Following this logic, the MFRB suggests a range of options to show the spectrum of possibility to policymakers. With the introduction of a basic income, numerous reforms become possible, particularly fusions of the income tax for individuals (e.g. “impôt sur le revenu des personnes physiques, IRPP”) and the general social contribution (contribution sociale généralisée, CSG). Indeed, issues have been raised regarding tax exemption policies for income tax, and income splitting, that is whether the income tax apply to individuals or to households.
Fiscal expenses through tax exemption are largely used by wealthy households to reduce their income tax. Therefore, it seems wise to reduce their impact. Yet some of them also play a role in social protection, particularly for the poorest households. For example, tax credits given for paying a nursery school service, and other non-profit organizations.
The MFRB formulates proposals for an adjustment of fiscal expenses (through tax exemption) in order to keep a tax exemption level of around 34 billion euros (the 2014 figure) for the French households, after the merge of income tax and general social contribution (IRPP and CSG) and also a high tax rate (20 percent to 30 percent) from the first euro. Additionally, these proposals would allow shifting the advantage of tax exemption toward poor households.
The MFRB also formulated proposals to switch some fiscal expenses to mechanisms involving “service cheque“, following the principle of drawing rights developed by the tenants of unconditional autonomy. Such a proposal would actually allow the absorption of the benefits associated to the solidarity income (RSA), as discounts for public transportation, school restaurants, sports or culture.
Individualisation of the income tax or household taxing?
The second issue is the income tax individualisation. Nowadays, the income tax is applied to households. Should it be applied to individuals, simultaneously as the implementation of an individual basic income?
In this report, the MFRB presented two alternative solutions. The first considers the fusion of the income tax and the social contribution (IRPP and CSG) into an individual tax. The second integrates the basic income into the income tax system in order to preserve household taxation. This second proposal advantageously avoids a sharp tax increase for households where there is a large income disparity between the couple’s incomes.
Finally, the MFRB considered possibilities of converting some employment subsidies to a basic income, particularly the exemption of employers’ contributions aimed at low salaries (exonération “Fillon”).
With such a broad proposal spectrum, the MFRB wanted to put the minimum social benefits reform in the perspective of a broader and ambitious French redistribution system reform, which would associate the implementation of a basic income with fiscal reform.
The MFRB is pleased that the question of a basic income is currently being considered by French policymakers. On the one hand, this report provides an array of ideas regarding minimum social benefits. On the other hand, a Digital National Council report described the future of organisation in the context of the digital revolution. The expert assessment brought by addressing these issues puts increasing emphasis in the public discussion on the basic income and the new opportunities it brings.
Translated into English by Romain Garbage and Antoine Stéphany
Reviewed by Tyler Prochazka
by Stanislas Jourdan | Feb 25, 2016 | News
Paris was the ‘place to be’ for basic income last Thursday, February 4th, at a high-profile conference featuring key basic income personalities from France and beyond.
The event, which was organised by the liberal think tank Génération Libre, was held at the famous Salle Gaveau, and was attended by about 600 people.
This conference united diverse individuals, with myriad different backgrounds and values, around one common interest: basic income. Attendees included prominent foreign basic income supporters, such as Belgian philosopher and political economist Philippe van Parijs and Brazilian politician and economist Eduardo Suplicy, as well as French politicians from left to right — including former ministers Delphine Batho and Alain Madelin and European parliament members Karima Delli and Sylvie Goulard — in addition to members of the civil society, entrepreneurs, and basic income sympathizers who were simply curious to know how the idea is progressing in France.
Economist Marc de Basquiat launched the show with a presentation of how basic income could fix the complexity and inefficiency of the French tax-benefit system, and introduced key steps to move forward the implementation of a basic income. He also presented the results of a microsimulation of the redistributive effects of a basic income scheme in France. It showed a modest increase in social contribution from wealthy households, while the poorest, and especially families would benefit most.
Next, Jean-Eric Hyafil, an economist and member of the French Movement for a Basic Income (MFRB), delivered a presentation in which he emphasized the rapid growth of the movement in the past few months: “basic income had never known a surge of interest such as the one we are living know,” he said.
After these opening talks, the floor was given to Philippe van Parijs and Eduardo Suplicy, both prominent figures of the basic income movement, historian Laurence Fontaine, and Lionel Stoléru, known as a historical proponent of the negative income tax in France in the 70s.
These four panelists laid out the philosophical and economic justifications for the basic income. Philippe van Parijs stressed the three core principles of basic income – a basic income must be universal, unconditional and individual – and stressed that basic income is, first and foremost, a matter of freedom. Lionel Storélu called for a better integration of fiscal and social systems, something basic income would eventually make possible.
The liberal thinker and former minister of Economy was the only dissent voice among the speakers. He gave a very critical speech, in which he claimed that basic income would encourage idleness. As he stated, “In wanting to do too much, you risk losing effectiveness in the fight against poverty.”
Other speakers — including Diana Filippova (Ouishare), Benoit Thieulin (National Digital Council), and entrepreneur Yann Hascoet (Chauffeur Privé) — were able to relay their firsthand experience in the new digital economy.
Thieulin, co-author of an important report on the Transformations of Work in the Digital Era ordered by the Ministry of Labor, justified basic income on the ground that we were “facing an unprecedented and much deeper upheaval than the industrial revolution. It is thus not realistic to try adapting the new digital assets to fit in the old socio-economic frameworks”. According to Thieulin, basic income allows a smooth transition toward the new economy.
“We keep saying we tried everything to fight unemployment. Well no, we haven’t tried basic income!” – Benoit Thieulin
Following Thieulin, Diana Filippova delivered a talk in which she argued that “basic income would enable a better redistribution of the wealth originating from the digital labor, and in particular the profits made from personal data collected through social networks.”
Politicians beyond borders on basic income
After the talks from the representatives of the new digital economy, politicians took the stage at the conference. These political discussions showed that, in spite of the ideological differences, it is still possible to have a common goal – which, in this case, is introducing basic income into public debate. As Frédéric Lefebvre, from the right-wing party Les Républicains, claimed, “The government has no right to miss out on this debate.”
The Socialist Party’s Delphine Batho, former Minister of Ecology, also highlighted that “basic income is not just about giving a handout, but it is about entering into a new ecological, digital and social model.”
Sylvie Goulard, member of the European Parliament (MEP) from the Liberal party, expressed her interest in the idea. As president of the parliamentary intergroup on poverty, she argued that poverty implies a significant deprivation of freedom. According to Goulard, a European basic income would make sense: “I have never believed in a complete harmonisation of social systems in Europe … However, the idea of guaranteeing a decent income for all across Europe could be shared.”
Member of the European Parliament Karima Delli insisted that basic income is part of an emancipatory project. It should allow a transformation of the economy by allowing new forms of work. “It will allow people to ask each other: what do you want to do with your life?”
Too soon to decide on an appropriate level
Both Goulard and Lefebvre agreed that, importantly, it is not yet time to decide upon the level of basic income. “There is still a lot of work to do and we need a democratic debate between possible options after we have appraised works on this,” Goulard said.
As this conference showed, basic income is no longer the utopian dream that it was considered not so long ago. In the past few months, all eyes have been turned towards the Finnish initiative to experiment with basic income; more recently, however, attention has focused more and more on how basic income might evolve in the French society, and politicians from both sides of the spectrum have started to officially support the idea.
Indeed, Ministers are discussing the idea even at the level of the national government. After the declaration of Minister of Economy Emmanuel Macron, stating that basic income was an interesting idea we should study further, the Minister for Labour Myriam El Khomri agreed that it was “a beautiful idea that we should consider.” Her statement followed the report handed out by the National Digital Council to the Ministry of Labour at the beginning of January, supporting basic income as one out of 20 possibilities that might help to cope with labour evolution due to the digitalization of the economy.
In the space of a couple of months, 3 amendments on basic income have been presented to the National Assembly, from representatives of parties on the left as well as the right.
The next important event will take place at the Finnish embassy in Paris on the 3rd of March, organized by the French Movement for a Basic Income (MFRB). Then, on March 9th, a motion tabled by Green Senator Jean Desessard will be debated at the French Senate.
Nicole Teke and Stan Jourdan
by Stanislas Jourdan | Feb 23, 2016 | News
Finnish basic income experiments: a model for France?
Thursday 3rd March, 19h
At the Finnish Embassy in Paris
With Olli Kangas, Martine Alcorta, Arnaud de l’Épine, Jean-Éric Hyafil
One year ago, the new Finnish government committed itself to run local basic income pilots, in order to assess its impacts in case it would implement UBI at national level.
The move attracted an unprecedented level of attention. What are the exact proposals being considered? How to guarantee the scientific quality of such experiments? And what are exactly the ambitions of the Finnish Center-Right government? Is the approach relevant for France where pilots are also being discussed?
The French Movement for Basic Income (MFRB) is pleased to invite you to join the conversation with our key speakers:
- Olli Kangas, head of Research at KELA (the Finnish Institute for Social Protection)
- Martine Alcorta, Regional Council Member in Aquitaine Limousin Poitou-Charente. She is pushing for a basic income pilot in the region, where a motion was adopted last year.
- Arnaud de l’Épine, economist, member of the think tank Ars Industrialis.
- Jean-Eric Hyafil, Phd researcher, founding member of MFRB
More info here.
Registration: nicole.teke@revenudebase.info
by Marc de Basquiat | Feb 1, 2016 | Opinion
Multiple surveys across many countries show an increasing support for the idea of providing every citizen with a monthly lump-sum allowance to ensure everyone can meet their basic subsistence needs. In France, the IFOP (a leading French national market research institute) has shown that this support goes beyond political orientation divisions. From the question: “Are you in favour of implementing a guaranteed basic income for all citizens which would replace most existing allowances?” came a positive answer, depending on the degree of support for one party or another, from 72% to 79% for left wing sympathizers and from 50% to 54% for right wing sympathizers.
However, what would an unconditional basic income in France look like in concrete terms?
The Finland experiment
Since the election in April of the Finnish pro-basic income coalition, the topic has given rise to renewed international interest. All started when the Prime Minister of Finland Juha Sipilä announced the launch of a series of pilots, the most important being a “universal basic income” [1], in order to reform the social security system in response to the evolution of the labour market. This will also allow the evaluation of how to reinforce autonomy and incentives to work, as well as reducing bureaucracy and the complexity inherent in accessing social assistance.
The lead role in this project has been given to professor Olli Kangas (KELA) who has outlined the following schedule[2]: preparation phase from December 5th, 2015 to November 15th, 2016; two-year experimentation starting in 2017; evaluation in 2019.
Olli Kangas explained that the work group will evaluate at least four options:
- a “full basic income” (~800 €) replacing almost all basic and insurance-based benefits;
- a “partial basic income” (~550 €) replacing all basic benefits but leaving intact almost all insurance-based benefits;
- a negative income tax in which benefits would phase out as people earn more money;
- miscellaneous other approaches including a universal income and additional components.
Everyone who has recognised the need for major reforms of our social protection mechanisms perceives the announcement of the Finish pilot as an opportunity. However, we need to give time to our Finnish friends for their project to mature.
Which options are possible in France?
The Association for the Introduction of an Existence Income (AIRE) has been working on these questions since 1989, gathering studies and proposals from numerous experts, philosophers, economists, sociologists, politicians, etc. The French Movement for a Basic Income (MFRB) created in 2013 involves activists from a wide variety of backgrounds, leading actions through the country and enriching proposals by bringing together citizen experiences from the grass-roots[3].
Despite apparent simplicity, an unconditional basic income would require a series of structural choices. Precise adjustment of the parameters would need to be made in order to ensure it performs optimally in terms of justice and efficiency. Considering the vast number of options, it would be fallacious to believe that there is an ideal solution. Actually several options that must be weighted by parliamentary and experts in order to create a consensus that is adapted to the reality of our country.
Our experience leads us to recommend a universal income that would vary based on the beneficiary’s age. In particular the case for children should be processed separately, which means organizing an in-depth discussion about the French family assistance policy. This means replacing all or part of the actual eight allowances[4] by a lump-sum for each child. A key stake is to eliminate the high variability of the State grants according to the child’s rank within the family, the matrimonial status of the parents or the parent’s income (knowing that a single child of a middle-income level couple currently receives a remarkably low grant). The potential variation of the universal income amount according to child age (3, 14, 18 year old thresholds) must also be further investigated.
Similarly a discussion is needed regarding senior citizens. The question of incentive to work disappears with the elderly, but the dependency issue arises. Do we need to define a higher amount above 65 years old? How should the matrimonial life conditions be integrated? The ASPA[5] level (800 € for a single person, 1242 € for a couple) gives an indication but not a clear answer on the solution to be implemented.
The coordination with housing allowances constitutes a third theme to be carefully analysed. Acknowledging the inflationary effect of housing allowances (APL) on the rental market price, some politicians and economists[6] are investigating the potential effects of merging the APL and the RSA[7]. As the AIRE association is attached to the Tinbergen rule[8], we are highly reluctant to support this proposal, but the underlying issues must nonetheless be addressed. In any case, it is important to revisit conditionality links between several allowances and the housing grant, in particular the existence of a problematic “housing lump-sum” component within the RSA.
The last framing issue is to define the scope of beneficiaries for a “universal income”. Despite this designation, it is necessary to limit eligibility to a national community. This needs to be defined in terms of residence and/or nationality, probably through continuity of the rules applying today for the RSA beneficiaries. However, this still creates a variety of fundamental questions, for example the potential right to the universal income for prisoners or asylum seekers (currently receiving the ATA[9]).
Three scenarios for a universal basic income for “active age” adults
Similarly to the Finnish approach, we identify three quite different scenarios to defining a universal basic income that would be paid to any adult in France.
- Baseline: extend the distribution of the “RSA single person allowance” to the whole country population (excluding the housing lump-sum component), being 470 € by month in 2016, financed by a flat tax system replacing several current basic social and family allowances as well as tax mechanisms.
- Maximised: distribute equally to the whole population the entirety of the social protection budget, including pensions and unemployment benefit. This would mean about 800 € per month.
- Dynamic: delete all employment incentives to companies and allowing a massive flexibility improvement in terms of minimum salary, in order to finance a basic income ranging between 500 € and 550 € by month. This would also replace a major part of the social and tax mechanisms but leave intact all insurance-based benefits.
The financial feasibility of scenario A is proven and it does not lead to a large upheaval of the redistribution operating in France. It allows a massive simplification of the social and tax systems, facilitating the daily life of the population and reducing operational costs. This scenario, like the following ones, eliminates many inconsistencies, iniquities, and numerous more-or-less known perverse effects. In terms of microeconomic analysis, it implies a massive evolution neither by an income effect nor by a substitution effect, unlike the other scenarios. However, when it comes to tax in france for non residents, one may have to pay tax on income that comes from French sources. In other words, if you work for a French company, even if you do not reside permanently in France, the income you earn will be taxed.
Scenario B designates the losers: those who contributed all along with their life for pensions and unemployment benefits and who would be left without those related benefits. Neither the AIRE nor the MFRB association support this scenario. Such an approach – if it proves to be meaningful – could be considered only through a very long migration phase from one system to another. This would need to be built cautiously, with the implication of the labor unions. Besides, the high level of the benefit leads to a high income effect, many people being possibly satisfied by this amount without seeking a complementary paid activity. The substitution effect contributes on the same way, due to the high level of contribution necessary to finance it.
Scenario C is probably the most audacious challenge, by lightening massively legal constrains framing the labour market, leaving it up to individual and collective negotiations. Citizens with better secured economic status are then on a better position to decide whether to accept or not professional opportunity offers, or to create their own activity by minimising their personal and family risks. The micro-economic analysis is more ambiguous, the income effect being stronger than in scenario A and on the contrary the substitution effect encouraging the activity thanks to a higher flexibility of the labour market.
Of course, the consensus that will emerge from a parliamentary work gathering representatives of all parties and the support of experts from diverse fields could finally be a combination of those three scenarios with potential integration of others approaches. In any case, no option presented in this note should be excluded without in-depth investigation.
Special thanks to Xuan-Mai Kempf for translating the text from French.
ENDNOTES
[1] https://www.kela.fi/web/en/press-releases/-/asset_publisher/LgL2IQBbkg98/content/universal-basic-income-options-to-be-weighed?_101_INSTANCE_LgL2IQBbkg98_redirect=%2Fweb%2Fen%2Fpress-releases
[2] https://www.vox.com/2015/12/8/9872554/finland-basic-income-experiment
[3] Some discussion papers from the field can be tough however well documented. For instance, in order to rebel against the home control by the family assistance administration: https://www.lesenrages.antifa-net.fr/la-caf-contre-les-femmes/
[4] Family allowances, premium for age, family complement for 3 children, basic allowance for child under three, school yearly allowance, RSA increase for each child, income tax reduction according to the number of children, tax reduction for child schooling.
[5] Solidarity allowance for elderly persons.
[6] Cf. the « Unique social allowance » of François Fillon or the IPP report: https://www.ipp.eu/publication/juin-2015-reformer-les-aides-personnelles-au-logement/
[7] RSA: Revenu de Solidarité Active, is the main French allowance providing a minimum guaranteed revenue.
[8] Based on the name of the first Nobel Prize for Economics winner, Jan Tinbergen, a supporter of an unconditional basic income, who stipulated that for each policy objective, one policy instrument is needed, and one only.
[9] Allocation Temporaire d’Attente.
