Italy brings in a universal basic income

Contributed by Jim Hayes

The Italian government has is going to implement a universal basic income. It is a core policy of the Five Star Movement (MS5), which is Coalition with the anti-refugee Northern League, and contained in the just released budget for the coming year, along with the introduction of a flat tax and pension reforms.

A universal basic income is ensuring that every citizen has a guaranteed minimum income, whether they have a job or not. It can, is it is in this case,  be means tested.

It’s introduction brings a potential for conflict with the European Union (EU), which is focused on extracting from Italy payment for its considerable national debt to GDP ration, now standing at 131.2 percent, and seeks to keep member state government expenditures under the target of 3 percent of Gross National Product (GDP).

Although on paper, Italy’s budget plan only increases expenditure by 2.4 percent, in may well blow out from this. If it does, the arguments will start in earnest.

Bringing it in is at present estimated to cost €10 billion.

Nevertheless, proponents of the universal basic income argue that the injection of more spending money will increase economic activity and cover the cost of its implementation, encourage jobs growth and increase tax revenues for the government.

EU president Jean-Claude Juncker has already criticised the plan and been rebuffed by the MS5 leader, and one of the deputy prime ministers, Matteo Salvini, who has threatened to sue for damages.

He said. “He [Juncker] should drink two glasses of water before opening his mouth and stop spreading non-existent threats. Or we’ll ask him for damages.”

Juncker had suggested that claimed Italy spending too much would put an end to the Euro.

The concept of a universal minimum income does not sit well with the tradition of neoliberalism.

Di Maio wrote on Facebook that the agreement marked a historic day and was a victory for Italian citizens, not the government.

“For the first time in the history of this country we will erase poverty thanks to the basic income,” he said. “We will finally give a future to the 6.5 million people, who until now have lived in poverty and been completely ignored.”

He added that the target also contained measures to spur growth. It will now begin its passage through parliament before being presented to the EU by 20 October.

One of Italy’s biggest problems has been the massive scale of tax avoidance at the top end. There is a question mark over whether the new government is going to be able to tackle this. It impinges on whether the universal basic income, tax and other changes are going to bear fruit. Italy also needs a great deal of infrastructure spending to get up to standard.

But this does not take away the potential merits of a universal basic income. It is a form of income redistribution downwards, helps to take away the stigma of unemployment and re-engage the marginalised as participants in society and the economy.

With the failure of more traditional approaches, this is becoming an increasingly popular alternative.

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