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A first step towards basic income

November 15, 2017 12:06 PM
By Oliver Craven in Liberal Democrat Voice

Basic Income is often seen as a policy that would happen in an ideal world, with its proponents apparently lacking any idea on how to get there. In my view, advocates like myself need to outline a plan that can bring us to a workable and simple welfare state that relies heavily on basic income as its primary source of support. That is what I am proposing.

A first step towards basic income would be to mostly replace the personal allowance with a payment to every person over the age of 18. While raising the personal allowance took millions out of paying tax and reduced taxes for millions more, it did nothing for those who were already under the boundary. As Liberal Democrats we must be looking out for the least fortunate and despite the benefits of raising the personal allowance it currently does nothing for those already inside it.

Replacing the personal allowance with a payment every month would benefit even the lowest paid by thousands of pounds a year, a welcome boost for many struggling families. The best thing is that this scheme is easily able to be revenue neutral, with income tax and national insurance contributions merged there would only need to be a .5% raise in the basic rate from the combined 32% to a new 32.5%, a rise of 3% on the higher and additional rates from the combined 42% and 47% to a new 45% and 50% respectively, with the boundaries for the higher and additional rates staying the same. Even with the most pessimistic assumption of the revenue split between Employee NICs and Employer NICs, this scheme manages to be revenue neutral to within acceptable tolerance (there is a calculated net gain of £1.9bn from the new scheme).

As this shows, basic income can be a viable policy that could make a real difference to many people's lives. I'm sure many of you know people who are struggling. What could they do with up to £60 extra a week? Now I have outlined a viable first step, it would be nice to know others thoughts on where we could go from there.

Note: personal allowance above includes both the income tax personal allowance and the national insurance allowance and the two taxes can be assumed to be merged on the employee side, with employer NICs unaffected.

* Oliver Craven is a party member in Lincoln, Sleaford and North Hykeham Liberal Democrats.