Richard Pereira's proposal lacks political realism.

AuthorKesselman, Jonathan Rhys

My original contribution to Inroads on the issue of all-cash policies to eliminate poverty in Canada carefully distinguished among the basic income, the guaranteed income and the fill-the-gap method. Each of those program structures was shown to have unique attributes, but all were found to pose major disincentives, massive financial costs and barriers to public acceptance. In his critical commentary on my article, Richard Pereira ignores the distinctions among these program formats and blithely shifts from one to another without acknowledging the differences. Pereira's critique focuses on my ballpark cost estimates for these programs. He asserts that my analysis "does not include any multibillion-dollar figures as savings to be derived from implementation of basic income." In fact, my article cited potential savings from the displacement of provincial welfare spending and the federal Old Age Security and Guaranteed Income Supplement. However, I argued that Employment Insurance and the Quebec/Canada Pension Plan should be maintained even if an expanded cash transfer program were implemented, since both are contributory programs that serve to maintain workers' accustomed living standards when their earnings are disrupted.

Pereira repeatedly cites the projections by Young and Mulvale of $132 billion in annual savings (2005 figures) that could accompany the implementation of a basic income. (1) To reach that sum would require the elimination of programs such as provincial welfare, Employment Insurance (which Pereira himself states should be retained), the OAS/GIS and the Child Tax Benefit. It would also require eliminating the Quebec/Canada Pension Plan unless offset by abolishing the basic personal tax exemption. Thus, it would impose income tax hikes for all Canadians even before considering the steep tax rate increases that would be needed to finance the proposed basic income.

Set against this putative $132 billion in program cost savings would be the $350 billion that would be the gross annual cost of even a meagre basic income averaging $10,000 per Canadian adult and child--far below any decent notion of the poverty line. Even Young and Mulvale projected the cost of a basic income granting $15,000 per year only to persons aged 18 to 64 at $327 billion, and that was for 2006.

Pereira also repeatedly cites the much lower projected $30 billion cost of a "fill-the-gap" or "top-up" version of a major cash transfer program. (2) Yet he fails to...

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