Jerked into life by the First Minister’s apparent though tentative support for the Reform Scotland think-tank urging a basic income guarantee, or universal basic income (UBI), Tom Gordonstoun writes in the Herald today:
‘Even on these antique numbers, the costs are astronomical at £20bn a year, or half the current Scottish budget. It would be partly paid for by scrapping some benefits, scrapping the personal tax allowance, and adding 8p to all rates of income tax. So the starter rate of income tax in Scotland would be 27% on the very first pound of earnings as opposed to 19p on earnings over £12,500, rising to 49% for the higher rate and 54% for the top rate. There is no doubt higher taxes will be used to pay for the emergency, but adding extra burdens just to give people back some of their own money seems a bizarre go-to solution.’
There are two clear irritants here for Gordonstoun. First Reform Scotland is not anti-independence and second, UBI unavoidably leads to higher taxes for the better-off. It costs but it’s worth it.
Contrary to some reports, Finland has not given up on the idea and there are many other experiments going on:
https://www.wired.co.uk/article/finland-universal-basic-income-results-trial-cancelled
With Gordonstoun, perhaps tellingly, is the discredited lobbyist group for the corporations and the rich, the Institute of Economic Affairs, formerly the Taxpayers’ Alliance, fronted by Kate Andrews:
https://iea.org.uk/the-case-against-a-universal-basic-income-ubi/
Over to you readers.
Talking-up Scotland / Scottish media fact checking is like shooting fish in a barrel 
Just a wee reminder for all you youngsters out there. When Beveridge introduced the basic ‘welfare state’ in Britain in the 1940s the tax rate on high or “unearned” income was 95%. That’s what it took then to do the right thing – and we all survived and benefited from it. If that’s what’s needed now for the greater good then so be it.
The money of the rich buys goods for the poorer just as well as it does for themselves.
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Useful historical context for the younger (under 60) readers.
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Who funds the Tax Payers Alliance, sorry the IEA?
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Bugger the Panda, you DO ask an uncomfortable question…perhaps an FOI to Tory govt? Give them a chance to use some of their £10,000 expense allowance increase…
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Alcohol, tobacco and many others
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Tory donors
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Right, here we go again:
1. Tax does NOT fund government (that prints its own money). Tax is to balance wealth distribution, and prevent inflation, it’s to balance the spend.
2. A government can ‘print’ and spend as much money as it likes if it is investment in society – improve or build infrastructure and services for example. This is balanced by taxation to prevent inflation from devaluating the currency, so the ‘worth’ of the spend is what determines tax. If the spend is the cabinet all buying themselves new yachts, then the tax will be big because that spend gives no returns to society or the economy.
3. The government has to spend first, then it can tax.
4. There are lots of forms of tax other than income tax. And there are lots of ways to structure your taxation system.
To tell the truth, I’m going off UBI a bit, great in principle – we can have a fully active society with everyone contributing in the way they want without stressing about how to pay the rent, people can move into work more easily and move between jobs, and do much more voluntary work. But, without a guarantee that there are no strings attached, it could be used for state control, depending on whatever nefarious purpose a gov’t might have.
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As usual, Contrary, you are quite correct in that ‘Treasury money’ created on demand can pay for anything considered necessary by Government. Government taxation is one tool for controlling the money supply and high rates of tax on that portion of the population who contrive to divert as much as possible to their own account can only make that tool more effective.
OK, the appropriate individuals/agents and their accounts have to be discovered before they can be taxed and that is something that needs to be done very thoroughly. Perhaps noting who is behind most of the squealing about ‘high’ tax rates of 40-60% makes a good start on this.
As to the rate of 19/6 on the pound in 1947, I feel that did have the effect of reducing financial social inequality to some extent – and explains the doggedness of the landed classes in their attempts, ever since, to turn the clock back to earlier times.
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PS. I just found that Richard Murphy has a good piece on this today. See:
https://www.taxresearch.org.uk/Blog/2020/04/11/tax-abuse-tax-havens-and-modern-monetary-theory/
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Will the FM seek the additionalpowers needed to implement UBI? The Scottish government has not campaigned for the additional powers needed to address health inequalities so I doubt if a request for UBI will be made. If I am wrong the likelihood is that such a request would be denied because we might ask for more.
Is this the future?
“Even if the intellectual hegemony of neoliberalism is finally broken (which I think unlikely in the near future), the self-interest of the Tories’ electoral coalition will rule out wealth taxes and restrain public expenditure, while Labour’s dominant liberalism and the social prejudices of its professional apparat will prompt policy caution and a renewed respect for “wealth-creators”. For all the “changed utterly” takes, Covid-19 may simply not be damaging enough to jolt politics into a new groove. More worringly, the “holiday of exchange value” occasioned by the crisis might futher encourage the moral valuation independent of the price system that has already been enabled by digital technology (what Will Davies has referred to as platform social-ism). Combine that with the petty authoritarianism of the police and the press, recently on show in the scolding of sunbathers, and the willingness of many British people to turn informer (“Are we the baddies?”), and we might well find that the future political consensus looks something like the Chinese social credit system with added Union Jackbootery.”
https://fromarsetoelbow.blogspot.com/
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So Ms Sturgeon appeared ‘tentative’ did she? Perhaps she has other things on her mind and was not expecting a question about the report that she may not have read yet.
Maybe she is not used to think tanks supporting SG policy. The SG has been working on this since last year. Four councils were going to trial it but events may have put that on hold. Ian Blackford has asked the Chancellor to consider it as a way of helping people at this time or in the aftermath of the pandemic when things are likely to be just as difficult for people throughout the UK.
https://www.holyrood.com/news/view,disabled-people-could-be-disadvantaged-by-universal-basic-income-inclusion-_15124.htm
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Tentative? Just my impression but as a borderline Aspie I often misread.
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The combined effects of austerity, Brexit and covid 19 are going to increase markedly inequality in Scotland.I do hope Nicola goes for UBI. The Tories’idea that Universal Credit is an alternative to UBIwon’t wash. But meanness is in their genes
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UBI – and its various forms; employment guarantee schemes; the EU concept of unemployment insurance for member states as an economic stabiliser and no doubt other emerging ideas – all need thorough, urgent examination now.
However, my more fundament aspiration right now – when the evidence is clearly before us – is to cement in the electorate’s brain one thing. There is a ‘magic money tree’ – there may strictly be more than one – available to a country that issues its own currency. (Actually its a spreadsheet!)
If we could move to a general acceptance of this basic fact and also to get voters to realise how money is created then our political debates and decisions would move to a much higher, better informed and more productive level. I had hoped that the evidence of QE c. 10 years go now would have shifted general understanding: surely this time? Surely even the Institute for Fiscal Studies must be having a re-think!
As a supporter of Scotland’s independence I am well used to being harangued about ‘deficit’. It is in this context that I recall reading this from John Redwood MP in 2018, the doyen of the right wing of the (once) austerity-obsessed Tory Party :
“I have not been worried about the state deficit for sometime, ever since Mr (Gordon) Brown found out that the UK state can literally print money to pay its bills.”
Source: http://johnredwoodsdiary.com/2018/03/05/the-twin-deficits/
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Thanks everyone for you enhancements of my sketchy starter. I’ve learned.
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Universal income, basic income or negative taxation has been discussed since 1780s, at least. However as far as I know only one country has trialled it and that was the US in several areas between 1960s to the 80s. I don’t think this was one 20 year trial, in any case if was trialled, the facts are there, I read them some years ago, it was a success. There was a rise in employment, with people having more financial security small business start up increased, noted increase in the health and well being of the population where it was trialled.
Gordonstoun just demonstrated his bias is an impediment to him penetrating the matter sufficiently to see any constructive advantage. His outrage at wage earners (striver?) having to paying tax on the very first pound earned, without considering that the wage earner would also be receiving a basic income on top of their wage. Much the same as my pension (classed as a benifit) is a taxable income, I need to earn very little and I get taxed. I have to, as Boris would say, take iton the chin. I would prefer to have a pension that meant that my very first pound I earn would be taxed. The bonus would be not having it called a benefit.
To add to the historical reminders;ingredients
when Harold MacMillan stated in 1957, “you have never had it so good” I don’t hear this as a boast, I hear this as a major grumble. If you look at the wealth inequality before, after the war and now, the period late 50s to early 70s was a period of more even wealth distribution. The elites, the wealthy were feeling the squeeze.
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