Catalan politics joins the debate on universal income

BarcelonaUntil 2023, ERC and CUP have committed to "design, implement and evaluate" a pilot test to introduce the universal basic income (UBI) in some age group. Catalonia thus joins the territories that have proposed similar experiments, despite the fact that, for the moment, the states continue to prefer incomes aimed at the population at risk of poverty. The main difference between the current guaranteed income of citizenship (or minimum living income) and the UBI is that the latter is aimed at the entire population of a territory and there are no conditions for receiving it: there is no need to justify, for example, a minimum level of income. Both rich and poor would receive it (the pre-agreement does not mention a specific amount), but not everyone would benefit from it. "Even if everyone received it, the richest 20% would lose out", says Daniel Raventós, PhD in economic science and president of the Xarxa Renda Bàsica.

In the calculations he has made together with economists Jordi Arcarons and Lluís Torrens, the economic allocation would be the equivalent of the poverty line, 8,815 euros per year in the State taking data from 2018 (in Catalonia it would be slightly above), about 735 per month (145 for minors). "It would mathematically end poverty", concludes Raventós, taking into account that the guaranteed income only reaches (due to lack of funding, management problems and insufficient publicity) a third of the people that Idescat places in severe poverty (376,000 in 2018). Inequality would also be drastically reduced.

How is it financed?

The main problem is financing it. According to the same authors, the gross cost would be around 285,000 million euros per year in Spain (excluding the Basque Country and Navarre) and around 53,000 million in Catalonia. "It could not be applied if it is not accompanied by a fiscal reform", he warns. Which one? In the book Renda bàsica incondicional ("Unconditional basic income") (Edicions del Serbal) they propose a profound modification of the IRPF (income tax): the amount of the UBI would be exempt, but from the following euro a single rate of 46% or 49% would be applied. In addition, the personal minimums and all deductions of the quota would be eliminated.

In Catalonia this reform would generate more than 30,000 million. As the benefits below the UBI would also be eliminated (those above would not grow) and administration costs would be reduced (workers would not have to be assigned to check that the conditions are met), it would save a further 15 billion. 7,700 million euros would still have to be covered, which could be reduced to 4,600 if instead of distributing the income per person it were done per household (each additional adult would count for half and each minor for a third). These resources would have to come from the highest incomes (taxes on large fortunes, reform of wealth tax and corporate tax, environmental taxes, combating tax fraud, etc.).

According to the authors, 70% of taxpayers would benefit from this, and to reach 80% they propose to establish a "rescue clause" (15,000 million more transfer from rich to poor, about 2,800 million in Catalonia). In short, anyone with an annual income of less than 30,000 euros would gain from this or would remain in the same situation in which they were (from 130,000 euros in the case of a family of two adults and two children) and the rest, the 20% with higher incomes, would lose out. The richest, the most: from 400,000 euros it would go from an effective rate of income tax of 24.85% to one of 38.91%.

Germà Bel, professor of economic policy at the UB, stresses that to the inherent difficulties to finance a UBI, Catalonia adds a basic one: it does not have full fiscal capacity, it only controls half of the income tax, and, moreover, it is collected by the Spanish State. Therefore, it could not leave the basic income untaxed and could only raise the autonomous tranche. Nor could it do without the benefits derived from Spanish legislation and would have to continue to manage those above the UBI. Financing the pilot plan would cost 4,200 million euros, "more than all the taxes regulated by the Generalitat". "They cannot do it in practice or legally", he stresses, and points to the "ignorance or lies" of politicians who talk about applying it in the short term.

There are at least two other problems. The call effect to poor people in other places, which would increase spending, and the flight effect of high incomes, which would reduce income. To try to solve the first one, a minimum time of residence would be fixed (the CUP proposes one year). For the second, Bel ironically proposes to "Cubanize Catalonia" to prohibit them from leaving.

Alaska and the Cherokee

"It is worth allocating much more money to income policies", says Oriol Amat, professor of financial economics at the UPF, who appeals to the European Union. In the world there are only two regions that are committed to a UBI: Alaska (dependent on a fund linked to oil) and the Cherokee community of North Carolina, both in the U.S. However, there have been experiments in Finland, Namibia, Iran, India or currently in the Californian town of Stockton. "It has been seen that crime has fallen, the schooling of the poorest sectors has improved, and alcoholism and drug consumption have fallen", says Amat.

It has also been shown to improve mental health and there are no conclusive results to know if it discourages job search. In Barcelona, between 2017 and 2019, Lluís Torrens led a pilot plan in ten neighborhoods located in the Besòs area. All the families were users of social services and a basic income of 400 euros was combined with other conditional incomes. "The users of the UBI had more incentive to look for work because the others lost their income if they found it".

The electoral program of the CUP is the most explicit, and also that of ERC makes mention of the UBI. "We do not have the powers and we have to be realistic and go step by step, but it is a goal to follow", Agnès Rotger, secretary of social rights and citizenship of the Republicans, explains. From JxCat they expose further doubts about the sustainability of the model, but they will study "any tool that helps to eradicate poverty and not stigmatise people who receive subsidies", says Gemma Geis. Whether the pilot plan is finally made will depend on whether they agree on it.