Rian
first , I am not talking about the recent experiement in Finland, once again it proved that unversal basic income designed to fail.
https://www.bloomberg.com/news/articles/2019-02-08/finland-finds-basic-income-failed-to-boost-employment
I want to talk about how the NIT can work and how UBI will fail.
for example,
assumption: we have 100k people relies on government grant. Each of them the government has to pay R5k monthly.
for UBI, the government must pay R5000 x 100000 = R500,000,000 ==> R500 millions monthly.
and the people will demand to increase x% of the grant annually.
for the 5 year budget, the government guarantee to spend R6 Billions x 5 ==> R30 Billions excluding annually increase,
the government will spend,
R6 Billions x (1+n%)0 + R6 Billions x (1+n%)1 +R6 Billions x (1+n%)2 +R6 Billions x (1+n%)3 +R6 Billions x (1+n%)4
if n% = 10%: (in Billion) ==> R6 + R6 x 1.1 + R6 x 1.21 + R6 x 1.331 + R6 x 1.4641= R36.6 Billions
if n% = 20%: (in Billion) ==> R6 + R6 x 1.2 + R6 x 1.44 + R6 x 1.728 + R6 x 2.0736= R44.65 Billions
for the population of SA (50 millions), your min annual budget for UBI is R15,000 Billions ==> R15 Trillions.
affordable? NO!!
if you are cutting 1/3 of the budget ==> R5 Trillions is still not affordable.
This model is no guarantee the people will look for the jobs or to improve their skills to fit the economy.
for NIT, same assumption apply,
First, you must have a job, then the government guaranteed that you will have R5K, otherwise, nothing.
then if your salary increased, the burden of government decreased.
same as UBI, the government must pay R500 millions monthly. (assuming all the job @R0 per month, but that is not really possible)
when the person increased their salaries per month, the government pays less per month.
assume the person started with R1500 per month, the NIT rate is 50% (i.e. R10000 per month pay no tax)
(R10000 - R1500) = R8500 ==> R8500 x 50% = R4250 (The government pays R4250 + R1500 salary = R5750 the person get)
so that increases the desire of the people to get a job. And in the same time, the government pays R750 less grant.
UBI
Best Case scenario: R30 Billions / month
Worst Case scenario : infinitive / month
NIT:
Best Case scenario: R0
Worst Case scenario : R30 Billions / month
So NIT is more affordable then UBI.
Also NIT can simulate people to find jobs, even if the company pays nothing to the person, however, that person can earn experiences and then later he / she can find a better job. NIT not only encourages people to find jobs, also NIT creates the environment the people can gain experiences and skills. But UBI is NOT.
any question?