Implementing a Basic Income Guarantee in Canada: Prospects and Problems

Robin Boadway is the Sir Edward Peacock Professor of Economic Theory at Queen's University, and a Fellow of the Institute of Intergovernmental Relations. He studied at RMC, Oxford and Queen's and has been a visiting scholar at Universities of Chicago, Oxford and Louvain.

We outline the case for a Basic Income Guarantee and characterize the alternative forms it could take. We argue that implementing such a program in the Canadian federation should involve collaboration between federal and provincial governments, with each level having some discretion over the size of the guarantee within their jurisdictions.

We draw on tax harmonization arrangements in Canada for guidance about how such collaboration could be managed. We propose a Basic Income Guarantee model for Canada that is sufficient to move all persons out of poverty, that is implemented through the tax system, and that is affordable. Our proposal is virtually self-financing in the sense that it redistributes existing federal and provincial transfers and does not require any tax increases. We illustrate our basic income guarantee program using simulations based on Statistics Canada’s SPSD model. Keywords: basic income guarantee, refundable tax credits, negative income tax JEL Classification: D63, H24, I38†

Prepared for the Collaborative Applied Research in Economics initiative, Department of Economics, Memorial University, for presentation November 14, 2018.

Read this article in its entirety here.