Abstract
Abstract This paper tries to answer the question of whether universal basic income on the European level is a realistic option or an illusion. As UBI implies a much larger EU budget and a redistribution of collected budget revenues, the chance of introducing UBI depends on the required redistribution – the larger the redistribution, the lower the chance. The chance is indirectly assessed by an exercise in which 50 percent of actual tax revenues generated by indirect taxes of member states is collected at the center and distributed equally to all citizens. Though the net costs to the rich are relatively modest, the results indicate that the idea of introducing UBI on the European level is an illusion.
Highlights
Universal basic income (UBI) was proposed by Phillip van Parijs in 2001 in the book “What’s Wrong with a Free Lunch?” and was discussed and mainly welcomed by several well-known economists, including Robert Solow and Edmund Phelps
The idea of universal basic income in different varieties has appeared in many countries in different forms: as pilot programs (Canada, Namibia, India), cash transfers (Alaska, Brazil) party programs, UBI associations, or theoretical discussions
Some affordability studies on national levels have been conducted, for example, in Slovenia (Korošec, 2010) or in Ireland (Seán Healy et al, 2012) which suggested that UBI leading to an improvement in income for the majority of the population could be affordable with a 45 percent income tax rate
Summary
Jože Mencinger: The Revenue Side of a Universal Basic Income in the EU and Euro Area some goods and services, for example, health and education, are public goods, and citizens are guaranteed the minimum social security. Would UBI be added to current public social, health and educational services, or would it replace them? Even among economically approximately developed countries, the notion of what is a socially equitable distribution of income and wealth varies greatly. This is reflected in the shares of the public sector in GDP, as the shares largely determine the abundance of a “free lunch” in a society. For example, UBI of e200 per month and that all Slovenian citizens, irrespective of age, would be eligible This would require e4.8 billion per year, or 13 percent of GDP, about as much as the pension fund, and increase the Slovenian share of public expenditure in GDP to Scandinavian levels. UBI is relevant because of the crisis, in which all the “smart” solutions proposed by global financial institutions, central banks, and governments, failed
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