An Alberta Guaranteed Basic Income: Issues and Options

For   all   the   job   booms   and   wealth   that   have   benefitted   Alberta   over   the  decades,  nothing  yet  has  been  able  to  drastically  reduce,  let  alone  eliminate poverty  in  the  province.  The  prospect  of  a  guaranteed  minimum  income  could help change that, and Alberta is particularly well positioned to roll one out and with relative ease and at a manageable cost.

An   Alberta   guaranteed   basic   income   could   be   straightforwardly   developed  by  revising  the  existing  provincial  tax  system  to  make  tax  credits  that  are  currently non-refundable  into  refundable  tax  credits,  such  that  people  earning below  the minimum  income-tax  threshold  will  still  be  able  to  claim  them  as subsidies.  This can be done while avoiding significant new funding and relying solely on budgetary measures to improve the fairness of the tax system.

Converting   just   a   few   non-refundable   tax   credits   into   refundable   ones   can  produce  a  guaranteed  annual  income  of  over  $6,000  for  a  single-adult  family and  over  $9,000  for  a  two-adult  family,  with  no  significant  new  funding  required.  This  would  improve  supports  for  37  per  cent  of  Alberta  families,  with the largest gains properly concentrated among the poorest households, and would reduce the rate and depth of poverty by 25 per cent.

An  even  more  powerful  approach  would  be  if  Alberta  were  able  to  persuade the  federal  government  to  combine  a  similar  program  federally  with  the  provincial guaranteed   basic   income,   converting   non-refundable   credits   into refundable ones  and   eliminating   the   federal   GST   credit.   A   combined   federal-provincial guaranteed  annual   income   would   increase   dramatically   to   over  $13,600  a  year for  a  single-adult  family  and  to  over  $19,000  a  year  for  a  two-adult family.   The  disposal  income  of  the  poorest  20  per  cent  of  Albertans would  increase  by  more  than  50  per  cent  under  the  combined  plan,  while  the  rate of  poverty   across   all   Albertans   would   be   cut   by   a   substantial   44   per   cent.   Among  single  parents     and     non-elderly     and     elderly     couples,     poverty     would     be     eliminated  completely. And  while  two-parent  families  and  non-elderly  singles  would  continue  to be  in poverty,  its rate declines significantly and its depth would be reduced by more than half.

The success of such a plan, of course, requires people with low incomes, even those below the  basic  income-tax  exemption,  to  file  tax  returns  in  order  to  be  eligible  for the refundable credits. Fortunately, filing rates are already high in Canada. Besides the task of raising filing rates higher, the appeal of this approach is that it is otherwise relatively easy to implement as a basic tax reform. Several other provinces and the federal government have publicly  pondered  the  possibility  of  a  guaranteed  minimum income.  Alberta  now  has the  opportunity  to  implement  one  with  little  disruption  to the  existing  social-support system  and  no  significant  additional  expenses,  targeting poverty  in  the  province  in  what may prove to be a more effective way than has ever been tried before.

Publication Date: 
The School of Public Policy Publications
Journal Name: 
School of Public Policy Publications
Calgary, AB