by Stanislas Jourdan | Apr 26, 2016 | News
A report commissioned by the government to Member of Parliament Christophe Sirugue recommends a complete revamp of the French welfare system. This could constitute a major stepping stone towards the introduction of a basic income.
In October 2015, the French government commissioned the Socialist MP Christophe Sirugue to conduct a review of the welfare system in France and formulate a proposal for improving and simplifying of the existing social benefits schemes.
The report entitled “Rethinking Social Minima” was released on April 18th and remitted to the French Prime Minister Manuel Valls. The report (available here) suggests three possible ways to revamp the welfare system:
- Simplify the architecture of the existing system by implementing 12 measures to reduce its complexity and make it more fair.
- Reduce the number of social minimas from ten to five by merging them.
- Create a “common protection floor”, which would in effect be a complete revamp of the current system, by ultimately replacing all of the ten social minima.
The last proposal, which is favoured by the author of the report, is distinct from a universal basic income. In fact, although the report comprehensively reviews the idea of basic income and stresses some of its merits, it excludes its implementation for now. One of the arguments put forward is that basic income is a bigger issue than the scope of the report, which only aims at improving the welfare system while basic income is implicated with other societal debates, such as the changing nature of work.
The French Movement for Basic Income, which was consulted by MP Christophe Sirugue, notes three main points of progress in the conclusions of the report:
- Opening the minimum income scheme to people from 18 to 25 years old.
- Making social benefit payments automatic.
- Partially individualizing the minimum income.
The Prime minister Manuel Valls welcomed the report, which is seen as “both pragmatic and ambitious” and has already asked all his ministers to work as fast as possible to implement the proposed reforms.
Confusing statement from the Prime Minister
In a confused statement on his Facebook page, Valls claimed that his government was opening the debate on “universal income” in order to implement it by 2018, while immediately making it clear he meant something very different than a universal basic income:
“Not a benefit paid to everyone including those who have sufficient income – it would be too costly and meaningless – but a targeted grant to all of those who really need it.”
“Unfortunately, the debate seems to be poorly started if the terms of the topic are not well defined,” responded the MFRB in a column in the newspaper Le Monde to clarify that universal basic income must indeed be universal, while debunking the idea that a full basic income was not affordable.
Many other media outlets and politicians – including Socialist MP Pascal Terrasse – reacted similarly, revealing once again the rapidly growing interest and support for the idea in France. Earlier this year, a report by the Digital Council also recommended running a basic income experiment.
Picture Credit CC Parti Socialiste
by Andre Coelho | Apr 15, 2016 | News
Credit to: Tri-City Radio
In this article, Martin Sandbu compares basic income to UK’s Universal Credit (UC), a policy introduced in the United Kingdom by Duncan Smith, the Conservative Party politician who recently resigned as Secretary of State for Work and Pensions.
Although UC implementation has been a “disaster,” according to the article, it does have some similarities with basic income — the most striking of which is the attempt to promote work incentives by reducing or eliminating the withdrawal of benefits as recipient’s earnings increase, in contrast to many traditional welfare programs. And this, according to Sandbu, is “exactly the right direction”.
More information at:
Martin Sandbu, “Free lunch: basic welfare policy“, Financial Times, 29th March 2016
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 Josh Martin | Jan 24, 2016 | News
In 2014, the Liberal party passed Policy Resolution 100, pledging to create a “Basic Annual Income” for Canada. Brean’s article discusses this resolution in context of the Liberal party’s recent electoral success and plans for the current government. By providing thorough context of the basic income movement and support in Canada—from recent publicity in Alberta, Prince Edward Island, and other places as well as the research conducted by Evelyn Forget at the University of Manitoba on the “Mincome” experiment in the 1970s—Brean’s article concisely summarizes many of the key factors in the debate on a basic income in Canada.
Joseph Brean, “Prospect of minimum income gaining steam as Canada clamours for new ways to manage welfare and benefits”, Montreal Gazette, 27 December 2015.
