After over a year of avoiding significant local COVID outbreaks, Taiwan experienced a scare in May with hundreds of cases emerging. This brought the idea of universal cash payments to the forefront of Taiwan’s political debate as millions of jobs were destabilized overnight.
With this backdrop, UBI Taiwan held its first-ever online basic income summit on August 15, inviting professors, activists, and politicians from around the world to discuss the state of basic income during the COVID pandemic.
Korea’s Gyeonggi Province Governor Lee Jae-myung opened the summit by noting the importance of the basic income movement in Korea and Taiwan. Lee is currently a frontrunner in the early stages of Korea’s presidential race. He has been called the “Bernie Sanders of Korea” because of his economic proposals.
“When the world is implementing expansive fiscal policy, basic income is gaining attention as the most rational and remarkable way to prepare for the era of the fourth industrial revolution,” Lee said in his address to the conference.
As the former mayor of Seongnam, Lee started a youth basic income program for all 24-year-old youth in the city to receive local currency every quarter. The scheme was shown to improve small business activity in the region. He later expanded the program to the province when he became governor.
Kim Kyeong Soo is part of the Gyeonggi provincial government vision planner. He is the planner of the provincial youth basic income program.
“What we are doing at our expense is to realize the basic social rights of young people,” Kim said in an interview for the conference.
This was a useful model during the COVID crisis because the provincial government was able to quickly expand the program to include all residents of the province during the economic downturn.
Kim also discussed how they increased a myriad of programs during the COVID pandemic and the plans to push for basic income on a nationwide scale.
“We designed it so that it could only be used in stores with annual sales of 1.2 billion won or less, so that the money could be actually revitalized for the small business owners of the real alley economy,” Kim said.
Members of the Basic Income Korea Network Mok Hwakyun and Kim Jae-seop attended the summit for the question-and-answer session. They noted how basic income has become a mainstream topic in Korea.
“The biggest change is that everyone knows about basic income now,” Mok said. “I hope Korea will be the first country” to implement UBI.
Prominent US activist Scott Santens gave a pre-recorded interview for the conference where he discussed the success and failures of America’s massive COVID relief program. One of the biggest changes that has emerged is the Child Tax Credit, which Santens said he believes will get more people on board with a wider basic income safety net.
“I feel hopeful that especially the monthly CTC is going to really change things here and help build momentum for a full UBI here in the US,” Santens said.
Taiwan’s Yangming University Professor Song-Lih Huang discussed the debate between Universal Basic Services compared to basic income. He concluded that UBS does not provide the same level of individual freedom as UBI.
UBI Taiwan Chairman Tyler Prochazka evaluated Taiwan’s COVID relief response and noted the inadequacy and complexity of receiving relief.
The situation became more severe this past May when a local outbreak caused Taiwan to go into level 3 lockdown for the first time during the pandemic. Taiwan is experiencing a bizarre contradiction, where record economic growth is fueled by its strong export sector despite the lockdown for other industries. At the same time, the lockdown has caused Taiwan’s employees to experience their worst economic situation in decades, particularly for the service industry.
As a result of the lockdown, half of Taiwanese experienced wage reductions of 10 to 50 percent, and 74 percent reported some reduction in wages. At the same time, 41 percent said they believed the government’s COVID relief program provided no help. One issue with the relief program is it relies on extensive documentation to prove an individual’s circumstance and can also reject an applicant if a household member has too much money in the bank.
For example, Taiwan’s unemployment had reached 570,000 people and the number experiencing lower than normal working hours had reached nearly one million during the lockdown. However, only 20,000 people were added to unemployment benefits during June which is less than one-fourth of the increased unemployment for that period.
Level two lockdown has been extended until September 6 in Taiwan, which places varying levels of restrictions on how businesses operate and closes some businesses entirely, such as certain entertainment venues. Even as much of the country returns to normal, many businesses will likely experience continued restrictions on their operations as well as reduced demand for the foreseeable future.
Despite one of the worst employment situations in decades for Taiwan, the government has only allocated around 6 percent of its annual GDP on COVID relief this year. Compared to Japan and the United States, which spent between 16 to 30 percent of their GDPs on COVID relief, Taiwan has given significantly less to its citizens as a developed economy.
Taiwan’s ruling party Democratic Progressive Party is moving toward another round of stimulus coupons worth 5,000 NT ($180 USD). Due to the stringent conditions associated with COVID relief programs, the universal coupons are the most accessible program from the government’s COVID response for many families. There has been a strong push by opposition parties in Taiwan to provide cash relief now for most Taiwanese instead of coupons and use the administrative savings to give an additional cash boost to poor households.
“Taiwan’s ruling party said they want to ‘share economic growth’ with all Taiwanese,” Prochazka said. “The real way to share economic growth is with Universal Basic Income.”
In Russia, as in many other countries, social benefits do not always reach those who need them. The problem has existed for a long time, and during the pandemic the number of poor people has only increased.
In an article on 11 February 2021 in Forbes Russia “A New Contract: how to reduce poverty rate in Russia”, the Director and Resident Representative of the World Bank in Russia, Mr. Renaud Seligmann, analyzes the possibilities of introducing a “minimum guaranteed income” in Russia.
“A common solution to the problem could be the implementation of a minimum income program that would combine cash payments to recipients with other tools, primarily providing motivation to work… At the same time, monthly payments should provide a living wage for each family member… Such a program, based on the income needs assessment and family assets, can be quickly deployed on a national scale.”
According to the Federal State Statistics Service, a little more than 60% of the population receive various types of social support, but about 16% of the poor are not covered by any social programs at all. These flaws are due to the archaic nature of the state social protection system, as well as extremely backward and conservative means testing mechanisms. Many citizens do not have an elementary understanding of the types of social assistance. In the age of high technologies, other acute problems are highlighted – the level of information equipment, the lack of new methods of work, the imperfection of the means testing mechanisms used, the confusion of legislation in the social sphere, as well as the level of information literacy of the population.
Today at the federal level 3.2% of GDP is spent on social benefits. The World Bank provides the results of economic modeling based on Federal State Statistics Service data on the implementation of a phased program of minimum guaranteed income of citizens. The program would cost, according to their estimates, about 250 billion rubles, or 0.3% of GDP. Its introduction in the future will improve the situation and reduce, in their opinion, the scale of poverty by about 60%.
Although this is not a ‘basic income’ according to the BIEN definition it would represent a huge step forward in social protection in Russia.
Editor’s note: The use of the term ‘basic income’ or ‘universal income’ here does not correspond to BIEN’s definition of basic income, since the payments each month will fluctuate with income. ‘Socle citoyen’ corresponds more closely to a Negative Income Tax, adjusted on a monthly basis.
On November 26 2020, the National Assembly voted on the resolution tabled by the group Agir Ensemble launching a public debate on the creation of a universal income called “Socle citoyen.” Why do you welcome this vote?
Marc de Basquiat: This vote is historic for three reasons. First of all, it was very broad, bringing together the votes of deputies belonging to five political groups close to the centre of the political spectrum: LREM, Agir Ensemble, MoDem, Libertés et Territoires, Socialists and related parties. Credit for this result goes to Valérie Petit, a northern representative, who launched and led an informal working group on the Socle citoyen project based on the platform we published in the Observateur on May 4 with the support of 80 co-signatories, including 50 parliamentarians. In-depth work was carried out, with a series of remote (because of Covid) meetings. The 48 deputies who tabled the resolution voted on November 26th really know the stakes and the key principles of the technical solution that we propose to study.
The second reason to applaud is the strong support of the La République En Marche deputies. Seventy of them voted in favour of the Agir Ensemble group’s resolution. At a time when many people have doubts about representative democracy, we can salute here the joint search for consensual solutions for our country by representatives from diverse groups, including the governing party. Let us recall that at its creation in 1988 the Revenu Minimum d’Insertion in 1988 received the deputies almost unanimous support. Yes, a reform as ambitious as the one proposed by this resolution aims to achieve consensus from all parties of the National Assembly. This is the process that Brigitte Bourguignon, Minister Delegate for Autonomy, supported with her speech.
The third reason to celebrate this advance is the fiscal nature of the Socle citoyen proposal that it is to be studied. Let us quote from the enacted text:
“The Socle citoyen is unprecedented in that it combines tax reform and improvements in social benefits. First of all, we propose to establish the universality of income tax: every French person, from the first euro of income, is taxed proportionally. This very fact constitutes being a part of and being responsible to the national community. It links one to the collective destiny and at the same time ensures assistance and solidarity.
With the mechanism of the Socle citoyen, the universal income becomes an individual tax credit, negative or positive. Thanks to tax withholding at the source, calculation and payment are now possible in almost real time. This is one of the great social benefits of this major tax reform: it makes it possible to calculate and automatically pay out the Socle citoyen, based on the universal tax, at the same time the reform achieves universality.
The fact that universal income is approached from a tax perspective revolutionizes the question of its economic feasibility. It is not a question of creating an nth social benefit that is painfully financed, but, first of all, of ensuring that all citizens are involved, in their own way, in the financing of public services. The same “right for all” is possible because, beforehand, we ensure the same “fiscal duty for all.”
Is this a sign that something is changing, at the parliamentary level and elsewhere, with regard to universal basic income?
Despite the trauma of the 2017 presidential campaign and the failure of Benoît Hamon’s project for a Universal Existence Income, many—of all political stripes, I can attest to that—grasped the importance of a transfer mechanism that would automatically guarantee a minimum of resources to everyone, regardless of the vagaries of life. But until recently, we hesitated to talk about it for fear of being suspected of providing a caution for the Hamonist party, Generation-S.
I believe that with the Covid-19 crisis, we all understand that the issues we are facing go far beyond political posturing and partisan arrangements. I am happy that the only Hamonist deputy in the Assembly, Régis Juanico, has lent his voice to the resolution drafted by Liberal deputy Valérie Petit. It is by working together that our elected officials will be able to re-inspire politics!
On the other hand, I am disappointed that no Les Républicains representatives dared to break with a conservative voting directive. The speech of LR deputy Stéphane Viry started well, but its conclusion is saddening:
“The group Les Républicains salutes the willingness of the National Assembly, the most essential forum for public debate, to address this major issue, since it touches on the fight against poverty, for work, and social cohesion. These are all foundations on which to build a social project, national cohesion, dynamism for our country. As part of our efforts, we must constantly, all together, open up new horizons. (…) You are right to put this debate on the table, and our group is very much in favour of a frank reflection on work, on activity for all, on social protection, on the fight against poverty. However, as it stands, as formulated, we will not follow your proposal.”
In 2016, the Senate had carried out a mission of information on basic income, in which all the political movements, from the right to the communists, took part, leading to the formulation of a consensual report that illuminated the way forward. Let us hope that the 11 deputies who voted against the resolution on November 26 will discover, moving forward, that the Socle citoyen has no other ambition than to strengthen cohesion, economic dynamism and fraternity in our country.
What are the liberal arguments to defend the proposal of a universal basic income and what form does it take in this framework?
What seems to me to be common to all liberals—whether one feels on the right or on the left for that matter—is the importance one places on individual choice. A Socle citoyen can be formulated as follows: everyone pools the same share of their income (around 30%) and benefits from the same individual transfer (around 500 euros per month). With this single rule, which is easy to implement using the mechanism of withholding tax, everyone is in the same boat and knows exactly how the income tax they pay or the assistance they receive will evolve according to the events in their lives: change of job or loss of work, marriage or divorce, etc. the impact is always easy to calculate.
Such a proposal is not really a revolution. In fact, for tax households that are subject to the 30% marginal rate, my proposal is just a reformulation of the current tax calculation, with an identical result. For 2020 income, taxpayers in this bracket pay a tax whose monthly calculation is 30% of the taxable income of the previous month, minus €498.52 per tax share (let’s say €500 for a single person and €1,000 for a couple). This would not change much.
The Socle citoyen amounts to applying the tax calculation formula for wealthy taxpayers to everyone! A single person without income who currently lives with an RSA of €497.01 plus a housing allowance would receive €500 and still receive the same housing allowance. No change in his or her case. On the other hand, all other cases of poor and low-income households would be winners, to what extent, depending on what they have today.
You have been defending universal basic income for several years, as president of the Association pour l’Instauration d’un Revenu d’Existence (AIRE) and as a Free Generation expert. Do you think that the coronavirus crisis can bring about a change in opinion?
In March, with the crisis, millions of people discovered unemployment. In restaurants, transport, household services, construction, shops… All these jobs where you work hard, where you get up early. The State has multiplied measures, first by taking over from employers to pay more than half of the wages! We can see that a hazard can bring the bravest of workers to their knees, making them dependent on the community to ensure their subsistence.
This invites everyone to question the solidity of their inclusion in society. Am I in this position only because I deserve it? Do I owe nothing to anyone? How could the country have endured a “laissez-faire” logic, where everyone was left to fend for themselves in order to make a living despite the fear of catching a virus—whose danger was not really understood at the time?
Today, everyone knows they are vulnerable. Everyone has also experienced their own docility! During the first confinement, we were happy to cheer from the windows, it gave us a recreation and a semblance of social interaction. But deep down, we really understood that we are vulnerable and that we have a vital need of others. This is why the ” Socle citoyen ” project speaks to everyone: we contribute as citizens—through taxes—to ensuring a vital base for everyone. In these circumstances, no one is spreading foolish rhetoric about handouts?
Is the Socle citoyen universel an effective response to the economic crisis that is looming with the coronavirus?
No one knows how the crisis will evolve. In the second quarter of 2020, China is the only G20 country whose GDP has grown. Germany posted -12%, France -18%, India -24%. The second wave caused us to fall back, less sharply, but global economic balances will take time to readjust. Public debt is exploding. Even if it is relatively painless in the short term, no one can predict what interest rates will be in 10 years. Our accumulated debts may weigh very heavily, preventing governments from playing their role as buffers against social shocks. At that time, we will be happy to have established a Socle citoyen, the universal distribution of part of the income among all, so that no one will be in total destitution.
We can also venture the hypothesis that our country will regain the growth necessary to adapt and face the planetary challenges. Here again, the egalitarian sharing of a portion of the fruits of growth will be a tremendous driving force for national unity, a multiplier of energies.
By: Carlos Alvarado Mendoza y Jonathan Menkos Zeissig Translation: Julio Linares The Spanish version of the article can be found here.
Recently, the Central American Institute for Fiscal Studies (Icefi) proposed for Central America the implementation of a universal basic income (UBI), seeking that the States of the isthmus have a minimum guarantee of social protection, while contributing to counteract the impact of the Covid-19 pandemic. A UBI, accompanied by other public, social and economic investments, would accelerate the fulfillment of the 2030 Agenda for Sustainable Development and, by proposing a change structural in the welfare and economic growth model, could be the basis for the discussion of new social, political, economic and prosecutors in Central America.
Central American governments have implemented actions in order to contain the spread of the virus and reduce the impacts on people’s health and economic activity. However, these states have faced a complex scenario, although to varying degrees in each country, as the pandemic has exacerbated structural problems mainly related to the lack of equity in access and care of public health systems, the weak health care system and social protection and the low capacity to generate formal employment and productive transformation, which has as a consequence lead to high levels of inequality and poverty. Indeed, prior to the crisis, 45 out of every 100 Central Americans (about 22.5 million people) lives in conditions of poverty; furthermore, 82 out of every 100 poor Central Americans lives in Guatemala, El Salvador, and Honduras.
According to estimates by the Institute, the current crisis could cause the loss of up to 1.9 million jobs, and induce a significant increase in general and extreme poverty. Especially in Guatemala, El Salvador and Honduras, the current crisis could add at least 4.9 million people to poverty, according to data from the Economic Commission for Latin America and the Caribbean (ECLAC), which would further erode the weak social fabric of these countries of the region (Economic Commission for Latin America and the Caribbean (ECLAC), 2020, “Latin America and the Caribbean in the face of the COVID-19 pandemic: economic and social effects”, Special Report COVID-19 No. 3). Among the main measures that have been implemented by most Central American governments to limit the impact on the population, in terms of ensuring income, food security and basic services, particularly for vulnerable groups, are: food delivery; the creation of new monetary transfers; suspension of payment for basic services (particularly water, power and telephone); and, the increase in the amount of previously existing monetary transfers. Likewise, different types of protection programs have been put in place for workers in the formal sector, among which are teleworking, paid absence from work, unemployment insurance, reduction of working hours, among others. Additionally, additional direct support has been provided to individuals and families, consisting of credit payment facilities, support for workers in the informal sector, among others.
Although the measures adopted by the governments of the region are limited and of a temporary nature, they indicate the urgent need to implement permanent actions, from a long-term perspective, that make it possible to guarantee the gradual reduction of poverty in the countries of the region until they are eliminated and the rights of the people by strengthening States through the universal provision of social protection that allows rebuilding the social fabric of those countries.
Faced with the above, the Icefi has urged the Central American States expand and strengthen their social protection systems in a way that protect the population, prioritizing traditionally excluded groups and the most vulnerable, the economic and financial damages derived the crisis and accelerate the process of economic recovery. To achieve these objectives quickly and effectively, the Institute proposes the implementation launch of a universal basic income (UBI) that eliminates extreme poverty and significantly reduces general poverty. In its III Report Central American fiscal policy ―whose first chapters were published in July―, the Institute has calculated the costs and effects of the application of a universal basic income.
For the implementation of a UBI, the Icefi proposes to assign a sum monetary to each member of society, equivalent to the amount associated with the international threshold of extreme poverty (USD 1.90 per day in parity of 2011 purchasing power). From that account, you would also be paying the achievement of the 2030 Agenda of the Sustainable Development Goals (SDGs), in particular goals 1, 2, 3, 5, 8, 10, 12, and 16. The application of a UBI has an operational simplicity that pays to its rapid execution, avoiding creating more bureaucracy, opening paths to corruption and keeping beneficiaries in the trap of poverty. By being assigned unconditionally, it would allow not only to eradicate extreme poverty, decrease overall poverty, reduce inequality in income distribution, increase levels of economic activity and create the conditions for new jobs, but also the measure should provoke the modernization of fiscal policy and rebalancing necessary of responsibilities between citizens, companies and the government. From that account, when proposing a structural change in the welfare and economic growth model, UBI could be the basis for discussion of new social, political, economic and fiscal pacts in Central America.
The initial estimates made by the Institute suggest that the annual investment required for the implementation of a UBI ranges from 1.2% and 7.5% of GDP for the six countries of the region, Honduras being the country that would require more investment due to the size of its GDP and the number of inhabitants of the country. Similarly, Nicaragua would require an investment of approximately 5.8% of GDP; while in Guatemala and El Salvador, investment necessary would reach between 5.0% and 5.3% of GDP, respectively. In contrast, the countries that would face the least fiscal pressure to implement this policy are Costa Rica and Panama, whose investment would be around 2.2% and 1.2% of GDP, respectively.
Figure 1: Central America: necessary increase in public spending by the central administration to implement a UBI from threshold poverty level (2020-2030, figures as percentages of GDP).
At the Institute’s discretion, the implementation of a UBI could be carried out gradually, as shown in Figure 1 ―in a maximum period of ten years and serving the population in the territories with the highest poverty and less development, consistent with the achievement of the Sustainable Development Goals and with the necessary institutional, fiscal and economic restructuring that guarantees the effectiveness and sustainability of this policy over time. This way of gradually achieving the universality of basic income would allow States to advance comprehensively in the universalization of other public goods and services related to education, health, water and environmental sanitation, housing, among others.
According to estimates by the Institute, among the greatest impacts of executing this agenda, in addition to the elimination of extreme poverty, is the generation of 2.0 million direct jobs; the increase average of 20% in the rhythm of economic activity, mainly driven by domestic production; as well as improvements in the indicators of social welfare and equality. For the general fulfillment of the SDG2030 Agenda in the Central American region, the Institute has identified various probable sources of financing, among which the increase in tax collection stands out. As a result of the reduction of illicit capital flows, smuggling, evasion of taxes and fiscal privileges; as well as by the increase of some taxes that, additionally, could improve the global progressiveness of the tax system. In some states, indebtedness can also be considered as a financing mechanism. Additionally, the Institute reiterates that, on the side of public spending, it is possible to generate spaces additional prosecutors through two channels: by eliminating the items that are not oriented towards development goals, so that resources can be reallocated to programs that have such an orientation; as well as by improving efficiency of those that can generate better results in economic and social terms.
Table 1: Fiscal Space on the Taxation Side
The gradual implementation of a universal basic income, together with the advancement of public investments that guarantee the fulfillment of development goals, and a comprehensive fiscal reform ―more income, public spending based on results, greater transparency and an effective fight against corruption – are the elements that will allow Central Americans to successfully face this health and economic crisis, expanding rights and rebalancing social responsibilities. For this reason, the Institute urges all of society – peasant movements and promoters of individual human rights, workers, businessmen, academia, political parties and governments in office – to promote an open and sensible national dialogue, with a vision of the future, that has as objective of transforming States through a social, economic and fiscal pact that changes current political and socioeconomic trends and sets Central America on the path of sustainable, inclusive and democratic development to which the great majority aspire.
In particular, the states of the countries of the region must advance in the strengthening of their social protection programs, a central element of policy that allows reducing existing inequalities, not only in terms of income, but also from an inclusive perspective in economic terms and social that promote social cohesion. Furthermore, for Icefi, reducing the exacerbation of the poverty conditions in which more than half of Central Americans live may be possible by universalizing access to social protection programs, since the current context has only accentuated the existing limitations in terms of of the economic and social model. A better Central America is possible to the extent that an inclusive development model is formulated and built in economic, social and environmental terms, so that a universal basic income ensures a minimum base of protection that is accompanied by policies that guarantee for all a quality education; access to timely, effective and efficient health services; have public services of economic and social infrastructure that favor social cohesion; and that all implemented policies are consistent with an environmentally friendly strategy.
