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1. How
is a Citizen's Income defined?
A
Citizen's Income is an income paid by the state to every man,
woman and child as a right of citizenship. It could be financed
by a tax on all (or almost all) other income, but other ways of
financing it are possible.
2.
Would there be any conditions attached to receiving it?
Yes,
one. Recipients would have to establish their legal residence
in this country.
3.
Would everyone get the same amount?
No,
the Citizen's Income would be age related. There would be more
for elderly people than for adults of working age and more for
adults than children. There would also be supplements for disability.
But there would be no differences on account of income or wealth,
work status, gender or marital status.
4.
Would the payments be taxable?
No,
they would be tax free.
5.
How would Citizen's Income be paid for?
There
are different ways this could be done. One possibility would be
through a new income tax which would combine existing income tax
and National Insurance contributions. In principle all income
in excess of the Citizen's Income payment would be taxable, although
in practice the first slice of earned income (about £20
a week) would probably be tax free. The present system of income
tax allowances and reliefs benefit the better off more than the
less well off. Citizen's Income would ensure that everyone received
a similar Citizen's Income payment but richer people would contribute
a little more income tax than under our present system.
6.
Do we have anything like a Citizen's Income already?
Yes.
Child benefit, paid on behalf of every child regardless of the
income or work status of the parents, is virtually a Citizen's
Income for children.
7.
Why do we need to replace the present benefit and tax system?
Because
it fails to do the job it was originally intended to do. It has
become absurdly complicated and inefficient. Many children between
the ages of 16 and 18 are left in poverty; many adults are prevented
from working even in unpaid , voluntary jobs because of the rule
about availability-for-work. The existing benefit system stems
from the Beveridge Report of more than 50 years ago and the basic
principles of the Beveridge Report are as relevant today as they
were then. They were :
* The right of every citizen to a minimum level of subsistence;
* The need to preserve incentive, opportunity and responsibility.
But
- partly because of the disappearance of full employment, partly
because of social changes - the tax and benefit system has now
deteriorated into a complicated morass of constantly changing
social security and tax legislation, much of which is counter-productive.
Administration costs alone put nearly 2 pence on income tax. Despite
the large amount of annual expenditure on social security there
has been a steady and alarming growth in the numbers of those
in poverty.
Three
important areas need to be tackled:
THE UNEMPLOYMENT TRAP. Most claimants would like to work but they
are the victims of a system which has undermined the financial
rewards that used to make work worthwhile. Income tax, council
tax and National Insurance contributions are charged on earnings
below out-of-work benefit entitlements. Many unemployed claimants,
especially lone mothers and people with disabilities, find it
difficult and often impossible to earn enough to offset loss of
their dole money and pay their taxes, fares to work and childcare
costs.
THE
POVERTY TRAP. Working families with children can claim means-tested
Working Families Tax Credit, but this replaces the unemployment
trap with the poverty trap. By the time they have paid their taxes,
some families get only a few pence out of each extra £ earned.
The balance is skimmed off by the Inland Revenue and the Department
of Social Security.
PENSIONERS.
Many pensioners (mostly women) are still not entitled to a full
basic pension because they have not been in full-time work for
long enough, if at all, usually because they are looking after
others. Instead, they are expected to claim means-tested benefits.
Other pensioners, who have worked and saved all their lives, find
themselves no better off, sometimes worse off, than if they had
not saved at all. They find that their savings or their small
inadequate pensions disqualify them from income support and housing
benefit.
8.
So how would a Citizen's Income change things?
Citizen's
Income has the same objectives as the Beveridge Report but uses
different and potentially much more effective methods to achieve
them. Contribution records, means testing and income tax allowances
would be dispensed with and a Citizen's Income payment introduced
based on legal residence. Out would go benefit 'dependency additions'
(for spouses and children) - and in come individually assessed
Citizen's Income payments for each man, woman and child. Out go
availability-to -work tests - and in comes the freedom to take
whatever jobs are available without fear of prosecution.
9.
How much would Citizen's Income be?
Of
course Citizen's Income cannot be introduced at a stroke. The
first payments would have to be quite small - about £18
for adults and £15 for children at 2001 prices and incomes.
Yet even these amounts would produce significant transfers of
income to the poorest sections of our community because take-up
would be virtually 100 per cent and non-earning carers (including
many mothers) would receive guaranteed cash income of their own
for the first time ever. As the system was phased in the figure
would go up until it reached an acceptable level. Slowly but surely,
the Beveridge idea of a safety net which can be relied on but
which does not stifle initiative and incentives would become a
real possibility.
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