Nova workboard

a blog from young economists at Nova SBE

Universal basic income plan Switzerland

The idea of giving money for free gained attention the last years. In 2017, Finland will start a pilot project to provide a basic income to 100000 Finish inhabitants. The universal basic income plan of a Swiss proponent group was a controversial proposal which created a lot of discussion in Switzerland and dismissed by most of the Swiss politicians. The proposal of the basic income provides a guaranteed, unconditionally income for all the Swiss inhabitants without any regard to age, wealthy or not, where you live in the country, education and unemployment or not. The campaigners collected 100000 signatures to organize a ballot, the 5th of June 2016, to let the inhabitants make their opinion about it. The voting was not a success; the majority (77%) of the voters opposed the plan.

From the support camp there were a lot of arguments to introduce a basic income. Over 50% of work done in Switzerland is not paid (BBC Website). Care work, working at home and working in communities or societies are some examples of it. With a basic income this work would be valued a lot more than before. The inhabitants would no longer receive social benefits and insurance but instead they would receive 2500 Swiss francs per adult and 625 Swiss francs per child (Swissinfo.ch). This annual cost of this system would be, estimated by the government, 208 billion annual francs (Reuters). The basic income would replace all the other benefits and in that way, it makes the Swiss inhabitants more self-contained. It would also fight against extreme poverty and inequalities in the society. Through to an increase of technological capabilities of machines and the rapid technological change the last years, robots and machines would take over jobs and these jobs would become obsolete. The basic income would also provide more time for young people to study and starting an own business would be encouraged.

The financing part of these proposal is very difficult and the essential part. The way how this plan would be funded is not clear in scientific papers and articles I read. That’s also one of the reasons why the Swiss inhabitants were doubting about the viability of this system. By introducing a basic income, the government could save money by shrinking some federal bureaucratic institutions. To fund the income, tax increases are needed. According to an internet article on fastcoexist.com, about three-quarters of the cost would come from new taxes. New taxes have to be imposed to pay for the system. Higher tax on sales, tax on all of the electronic transactions and a value-added tax could be imposed but the value-added tax, a tax on the gross-margin of each transaction, would penalize the poor people but then you come to a vicious circle. As mentioned before there is less consensus about how to fund and that scares the opponents of this plan. Not only the financial part is a big issue, opponents point out that in Switzerland there is already a well-functioning welfare system and this social system works so opponents are not willing to change the system as how it is set today.

As mentioned in the beginning, Finland is one of the first countries to launch a pilot project a system of basic income and many countries are curious to see what the outcome will be. The basic income must always be seen in a cultural context so countries must pay attention while comparing with others (The Basic Income Debate in Switzerland: Experiences and a Republican Perspective, Eric Patry).

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Author: studentnovasbe

Master student in Nova Sbe

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