The Coronvirus pandemic has brought the issue of Universal Basic Income (UBI) to the fore. What is Universal Basic Income (also called Universal Citizen's Income)?
UBI is a payment that every citizen would receive from the government for as long as they live. No strings attached. You get the money just for existing. Adults would get around £5000 per year, children around half that. There are actually pilot trials of this going on in the UK right now, believe it or not. You can be sure that UBI is almost certain to be introduced whether the trials are successful or not. They will be successful according to the politicians, whether or not they actually were.
Hard to understand why the government would want to do this given it will cost billions of pounds? Well the argument goes like this. There are people in this country who have nothing. The homeless begging on our streets for example. By giving them £5000 a year, they will at least have money to eat and won't have to beg. And it will avoid the administration of benefits, because they will no longer have to apply for benefits.
But we are all getting this handout, you might say. What's not to like? Money for nothing! Bring it on, you might say.
Well, of course government money is not really government money. It is simply money that the government has collected from the public and businesses in taxes. And like all handouts they aren't free.
The money to pay for the UBI will be raised by removing the personal tax allowance of around £12000 that we are all entitled to as workers, and also by taking away certain benefits. In other words, instead of being able to earn £12000 and not pay tax on it, you will pay tax from the moment you earn your first penny. And with the removal of certain benefits, it will be the classic case of giving with one hand and taking away with the other. And as well as these changes, income tax will be raised to higher percentage levels than now, with all earners paying more tax, up to 8% more.
What the UBI really is, is a wealth redistribution scheme. It takes money from the workers to give to the non-workers. But not all non-workers will benefit the most. With the removal of the personal allowance, it also takes money away from non-workers like pensioners who previously worked for decades and earned the right to a well-earned rest in later life. No, the non-workers that will benefit most from this are the wasters, the ones that are young enough to work but can't be bothered, or get themselves into a mess through a lack of self-restraint with regard to drugs and alcohol. And it is the workers that will be paying even more tax to benefit the wasters.
In Scotland, Nicola Sturgeon is a strong supporter of UBI. No surprise there really, anything to appeal to her hard-core base of supporters that can be found in the drug-ravaged streets of Glasgow and Dundee.
Does Nicola Sturgeon not understand the concept of percentage? I don't think she does. When people are taxed at the same percentage rate, it means everyone pays the same share of their income, but not the same amount. For example (and for the sake of argument let's ignore the intricacies of the income tax system), 20% of an income of £20,000 means you pay £4000 in tax. 20% of an income of £100,000 means you pay £20,000 in tax. So, at the same percentage rate, people pay more or less tax according to their income. There is no need to apply a different percentage rate depending on your income!
(Sturgeon has history on charging higher earners extortionate rates of tax when she recently increased the Council tax on those in bands E to H, neglecting the fact that they were already paying far more Council tax than the lower banders! This woman is on a one-woman mission to destroy the hard-working better off and keep herself in power by handing the ill-gotten gains to her supporting band of wasters. Robin Hood isn't a patch on this dame).
Another unfortunate effect of charging higher rates of income tax on higher earners is simply that the wages of those at the top increase at a greater rate than those at the bottom, in order to counteract the higher tax levels applied. So, the difference in wages (the wage gap) between those at the bottom and those at the top simply gets wider and wider.
The solution to all of these problems is not to introduce a free handout to society's wasters nor to introduce even higher levels of tax on the working. No, the solution is as follows:
1. First, introduce a flat rate of income tax for everyone, regardless of their earnings. A 25% tax rate might be fair. 25% for everyone.
2. Secondly, taking account of the new flat tax rate, re-assess what every occupation is worth in wages, depending on all the factors that define the occupation. For example, how much study was required to obtain the qualifications for the job, how physically and mentally demanding is the job, how much responsibility does the job entail, etc.
Repeated attempts to tinker with an already screwed-up system of wages and tax in this country is simply not going to work. Nor is the introduction of a UBI which simply rewards wasters, and reduces all citizens to state controlled robots holding out the begging bowl.
UBI is not the answer.