A Citizen's Income is an automatic, unconditional and nonwithdrawable income for every citizen, paid for by reducing tax allowances and means-tested and contributory benefits.

A Citizen's Income scheme (sometimes called Basic Income or Universal Benefit) is intended to overcome the failings of the present welfare state. It would be simple in application, increase economic efficiency, help prevent poverty and unite our society.

1. How would the Citizen's Income be paid for?

There are a number of ways;

* by expenditure savings on existing social security benefits
* by savings on administration
* by raising extra revenue by abolishing income tax allowances and reliefs
* by extra revenue resulting from integrating National Insurance contributions into income tax
* from the results of increased wealth creation through economic efficiency

Expenditure savings would arise because the payments would be deducted £ for £ from existing benefits, and would be a far less costly system to administer than the existing tax and benefits system. The Exchequer would get more revenue because the income tax base would be wider, because employees' and self-employed National Insurance contributions could be integrated into the new style income tax (chargeable on both unearned as well as earned income) and because fewer people would be caught in the poverty and unemployment traps and would be able to contribute through their earnings.

2. What amount of Citizen's Income could be afforded in present circumstances?

That depends on what sort of CI we should opt for. There are three possibilities:

FULL CI - defined as "enough to live on" - would require such high levels of income tax
( probably around 70 per cent) that it is unlikely to gain political or public support.

PARTIAL CI - defined as "needing to be supplemented for those without other income" - is usually taken to mean half the rate of Income Support for a married couple with less for children but considerably more for old-age and disability pensioners. Partial CI would need to be supplemented by other provision, especially for housing costs and for families with children, but far fewer people would need it than need means-tested benefits at the moment. For the majority of people income tax minus CI would be a smaller proportion of their income than direct tax is now. The level would depend on the size of the pensioner supplements, the speed with which existing benefits and non-personal income tax reliefs (such as for mortgage interest) could be phased out and the state of the economy.

TRANSITIONAL CI - is defined as the small payments which would be the first step towards a partial CI system. For an example, see the illustrative scheme on this website: click here.

3. Would many people on a Transitional CI not have enough to live on?

There are problems to be faced. Like social security at present the amounts available for CI depend on taxation policy. The integrated income tax rate would have to be a few percentage points higher than the present standard rate of income tax plus National Insurance contributions and this would result in a more progressive tax structure in which a majority of the population had slightly higher net incomes after adding CI to and deducting integrated income tax from their gross incomes and a minority of higher paid people had lower net incomes than now.

4 . Is income tax the only means by which Citizen's Income could be financed?

There may be other ways as well. In Alaska every citizen receives an annual income from the profits of oil produced at Prudhoe Bay. In the UK we might look at the idea of a "social dividend" financed out of the profits of industry as it adopts new technologies..

One of the most distinguished social welfare experts in this country, Professor A. B Atkinson , in a lecture delivered at the London School of Economics to mark the 50th anniversary of the Beveridge Report, said: "In my view, it is ...a mistake to see basic income as an alternative to social insurance. The historical opposition to Beveridge should be forgotten. It is more productive to see basic income as complementary. For this reason , I am much more persuaded by the approach to basic income adopted by Hermione Parker (1989) as the first phase of a move to a basic income. In her BIG Phase 1, she outlines a scheme which would replace tax allowances, although retaining an earned income disregard, but would keep the existing structure of social insurance benefits. However I would see this partnership between social insurance and basic income not just as a transitional compromise, but as an alternative conception of the basic income. The basic income would complement an improved social insurance scheme by reducing dependence on means tested social assistance and helping low wage workers".