University of Bath

The Fiscal and Distributional Implications of Alternative Universal Basic Income Schemes in the UK

An IPR Report presenting a number of possible basic income schemes, and examines their fiscal and distributional impacts.

In this paper we make several original contributions to the burgeoning literature on basic income, modelling a number of original basic income schemes with both full and partial coverage.

  • Among systems with ‘full’ coverage, we have modelled four levels of generosity, and four types of compensatory tax and benefit reform for each.
  • For the partial coverage schemes, we model how expansion of coverage could be sequenced in order to distribute the fiscal burden over a longer period of time.
  • The revenue-neutral schemes assume that increases in expenditure must be broadly matched by increases in tax revenue. We suggest that besides the elimination of the personal income tax allowance and national insurance lower and upper thresholds, the income tax rate would have to increase by 4% (for a basic income set at the standard level of existing benefits) and 8% (for one with premiums for individuals determined as disabled) to pay for our schemes.