About

The standard definition of a Basic Income says only that it is a periodic payment. This means it might be paid weekly, fortnightly, monthly or perhaps annually.

However, low-income individuals often face financial difficulties with less frequent payments, so more frequent payments, such as weekly, are desirable.

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The internationally agreed definition of a Basic Income does not say whether a Basic Income should be paid as a taxable or tax-free amount.

• This allows flexibility in the design of Basic Income schemes.

However, paying a Basic Income as a taxable amount allows:

For further details, see our pages:

• Taxation Basics.
• Tax and Basic Income.
• Targeting and Taxation.

In summary, a taxable Basic Income reduces the overall cost of a scheme by broadly targeting the Basic Income to those in need, making it easier for a government to start and maintain a Basic Income scheme.

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• A Basic Income replaces all welfare payments of the same or less value and partially replaces larger payments.
• People with special needs will receive the Basic Income and top-up payments to maintain their current welfare income levels.

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• BINZ focuses on practical ways of transitioning to a Basic Income, of financing it and operating it.
• BINZ has no political alliances or biases.
• BINZ welcomes all proposals for the practical implementation of a realistic Basic Income.

• A Basic Income is both universal and unconditional, with the level based solely on age in broad bands, or in some cases on special needs.
  • For example, one rate for children, one for those of working age, and one for superannuants.
  • Special rates may be considered for those with ongoing special needs, or alternatively,
  • Those with special needs will receive top-ups to ensure that they receive current levels of income.
• Universal and conditional means that a Basic Income is paid to all eligible people, with no restrictions placed on the payment of the Basic Income or the use of the money after payment.
  • A Basic Income is usually paid into a personal bank account, without restrictions on the use of the money.
  • No time restrictions are placed on the use of the money, allowing people on low incomes and others to save money for future use.
• A Basic Income scheme is as simple as possible.
• The method of funding a Basic Income is as simple as possible.
• A Basic Income scheme is as fair as possible.
• A Basic Income does not preclude the payment of other allowances for hardship or exceptional circumstances.
• A Basic Income scheme does not reduce the incomes of those who are at present on legitimate and justifiable welfare.
• The payment structure and funding method of Basic Income do not increase inequality.
• A Basic Income does not worsen other social problems.
• A Basic Income sets no conditions on entitlement apart from citizenship, permanent residency, or work permits if or when required.
• A Basic Income may be a taxable or tax-free payment depending on the design of the scheme. Taxable schemes with Broad Targeting are preferable.
• The receipt of a Basic Income may be coupled to an appropriate income tax scheme to ensure Broad Targeting of the Basic Income to those with low to mid-range incomes.
  • A taxable Basic Income paid in conjunction with a suitable progressive tax scheme provides the best targeting of payments to those on lower incomes and will lower the cost of the Basic Income scheme. 
  • Targeting a Basic Income with an appropriate progressive tax lowers the cost of a Basic Income scheme and makes the introduction of a scheme feasible.
• The design of the Basic Income scheme shall not increase inequality by targeting payments to or unduly rewarding those who have no need of additional income.
• A Basic Income should be large enough to be meaningful and small enough to be feasible – probably in the range of 20% to 30% of GDP per capita.
• A Basic Income of the same or similar value as the current Jobseeker Support payments will meet these guidelines and is supported by most Basic Income advocates.
• A Basic Income will be automatically increased in value in line with inflation to ensure that its value is maintained.

On this website, the words Basic Income will be capitalised to indicate a Basic Income that conforms to the BIEN definition and the guidelines above.

Here are some quick guidelines on introducing and funding a good Basic Income scheme.

1. Minimise the initial cost
   To achieve a Basic Income, the payments must be of a realistic size, replace existing payments wherever possible, and be broadly targeted to those on low incomes.
   
   Minimising the initial costs makes it easier to introduce a comprehensive Basic Income Scheme.
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   To achieve this:
   • The net value of a realistic Basic Income is between 20% and 30% of GDP per capita.
   • A Basic Income will replace all welfare payments of equal or less value and partially replace larger payments.
   • A Basic Income will be taxable to enable Broad Targeting of the Basic Income to those on lower incomes, maximising the use of money.
   • Minimising the initial or up-front costs this way makes it easier to introduce and fund a Basic Income.
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2. The Multiplier Effect will boost government revenues.
   People on lower incomes need to spend money on essentials like food and housing, so they tend to spend money quickly. In contrast, those with higher incomes tend to accumulate money and spend it slowly.
   • This means that those on lower incomes have a higher Marginal Propensity to Consume (MPC).
   • Those with a higher MPC spend their money quickly, which boosts the velocity of money in their local area.
   • When a Basic Income is paid to all and Broadly Targeted to those on lower Incomes with a suitable tax regime, the velocity of money rises nationally.
   • When the velocity of money rises, there is an increase in the multiplier effect, the factor by which GDP rises when compared with an initial injection of money. Just as the velocity of money rises both locally and nationally, increases in the multiplier effect occur both locally and nationally. This has been observed with Basic Income trials.
   • Increases in GDP due to the Multiplier Effect increase government tax revenues, which can be used to fund the Basic Income.
   • Realising that increases in government revenue are a result of the initial Basic Income expenditure enables the real cost of a Basic Income to be more accurately determined.
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3. Calculate the real cost of a Basic Income
   The real cost of an ongoing Basic Income Scheme is the money that must be found from elsewhere to fund the scheme.
   • When a taxable Basic Income is paid out and spent, a portion of the money will be returned to the government in income taxes by the recipients, and a further amount will be returned as GST on goods and services they purchase.
   • As the money continues to circulate, a similar portion is returned with each circulation. Eventually, almost all the money from any one payment is returned as taxes.
   • Once introduced, the money being returned per period will rise to almost the same level as the total amount being paid out for that period.
   • Because most of the money paid out with a well-designed Basic Income scheme will circulate and return to the government over time as taxes, the ongoing real cost of a good scheme is minimal.
   • By minimising the initial gross expenditure and considering the net cost of a Basic Income, while accounting for the multiplier effect, and return of funds as taxes, the real cost of a Basic Income is found to be considerably less than the figure obtained by multiplying the gross payment by the number of recipients.
     
     A cost determined by multiplying the gross cost per person by the number of recipients is a false and grossly misleading cost, and is only used by those with little or no understanding of reality.
     
     More details on the above and funding a Basic Income are found elsewhere on this website.

BINZ was established following Professor Guy Standing’s lectures on “The Precariat” and “A Precariat Charter” during a Humanist and Rationalist conference held in Havelock North. 

• Professor Standing is a founding member of the Basic Income Earth Network (BIEN), an international organisation established in 1986 with the aim of linking individuals and groups interested in the Basic Income concept.

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