Basic Income in Canada – A guaranteed 18 329 $ would cost up to $96.4 billion in 6 months, excluding behavioral reactions

A parliamentarian requested that the PBO estimate the cost of a guaranteed basic income (GBI) program to ensure all Canadians between 18 and 64 have income of at least 75% of the Low-Income Measure (LIM; $24,439 for an individual and $34,562 for a couple) for the last six months of the fiscal year 2020-21.

The parliamentarian directed that the PBO should use the parameters set out in Ontario’s 2017 basic income pilot project. This pilot guaranteed individuals and couples with at least $16,989 and $24,027 of income per year, respectively.
The Ontario model uses a guaranteed income of $16,989 that determines the full benefit payment when no earned income is available in 2017-18. The Ontario program also provides people with a disability a universal additional $6,000 per year, which is not means-tested.

To calculate the corresponding income guarantees for future fiscal years, PBO calculates the full amount of the GBI based on 75 per cent of the low- income measure (LIM) as defined by the Ontario model in 2020 and 2021. The LIM measure is calculated as half of the median of the “equivalent disposable household income”.[JMM : this estimation gives 18 329 $ or 1 527 $ / month as can be seen from the excel file reprinted below]

As directed by the requestor, PBO presents three estimates based on scenarios that phase-out the benefit by $0.50, $0.25 and $0.15 for each dollar of employment income.

Basic income gross cost

Overall, as shown in Summary Figure 1, PBO estimates that the basic gross cost of the GBI would range between $45.8 billion and $96.4 billion based on the three scenarios for the six-month period. The supplemental guaranteed income for disability would be $1.7 billion.

Among provinces, Ontario would receive the greatest share of the GBI benefit – 42% of the total cost (on average, across the three scenarios).

These estimates do not incorporate behavioral reactions to the GBI. Some studies show that a guaranteed minimum income could have a negative impact on labour force participation and hours worked.

Potential Federal and Provincial Offsets

Building on PBO’s earlier analysis and at the behest of the requestor, PBO prepared an update of the potential offsets that could be generated if GBI replaced some income support measures targeted toward low-income and/or disabled individuals between the ages of 18 and 64. (… A part of GBI would replace some federal and provincial tax measures, such as the disability transfers, as well as social assistance allowances.)

PBO estimates the potential offsets from repealing these measures would be just over $15 billion for the October 2020 to March 2021 (inclusive) period. (Summary Figure 2).

Chosen excerpts by Job Market Monitor. Emphasis added. Read the whole story @ Costing a Guaranteed Basic Income During the COVID Pandemic