Parliament: Nominated MP proposes temporary universal basic income scheme to help S'poreans get through Covid-19 crisis

After taxes, the less well-off will benefit more from the scheme while the high-income will help to finance it.
After taxes, the less well-off will benefit more from the scheme while the high-income will help to finance it.ST PHOTO: LIM YAOHUI

SINGAPORE - Give all Singaporeans a universal basic income for the duration of the coronavirus crisis, to assure them that their basic needs will be met even if they lose their jobs, said Nominated MP Walter Theseira.

Under his proposal, dubbed the Majulah Universal Basic Income Scheme (MUBI), all Singaporeans - including children and retirees - will get $110 a week for 12 weeks. This will be considered taxable income and cost $4.62 billion.

But the money will not come from Singapore's reserves or other sources of tax revenue, he told the House on Tuesday (April 7).

Instead, the scheme will be funded by a temporary personal income tax increase of 4.25 per cent. Taxes will only be paid next year, when the economy is expected to have recovered.

After taxes, the less well-off will benefit more from the scheme while the high-income will help to finance it.

"In effect, MUBI will distribute money from the future, when the economy and jobs are expected to recover, to the present, when many Singaporeans are facing immediate cash-flow problems as they lose jobs or face sharp reductions in income," said Dr Theseira, an associate professor of economics at the Singapore University of Social Sciences.

He worked with Dr Ong Qiyan, deputy director of research at the National University of Singapore's Social Service Research Centre, on the proposal.

In a detailed policy paper, the two authors noted that the MUBI scheme should make payouts automatically on a weekly basis, without any means testing.

"This is to avoid any possible gaps in coverage. Incomes and jobs will be volatile over the next few months. A family that is financially secure today may not be so next month," they said.

It will also make it easier for the public service to administer the scheme, allowing them to prioritise other aspects of tackling the crisis.

Having a universal basic income scheme in place will also help nudge Singaporeans to follow advice to stay at home, they added.

 
 
 

For example, those who provide services such as home repairs may not feel that they can take adequate precautions to protect their health and that of their customers, but are reluctant to suspend their services due to the loss of income.

The scheme would provide a financial buffer for those with dependants, as well as those whose incomes take a sudden hit because of the crisis.

The authors noted that although the MUBI scheme is designed to avoid tapping past reserves or other tax revenue, the Government must be prepared to pay the difference if the proposed increase in income tax revenue is less than expected.

They added that the proposed scheme is "financed on the principle of solidarity, because all Singaporeans must face the Covid-19 pandemic together".

"Therefore, all Singaporean taxpayers are asked to contribute towards financing the scheme," they said. "Some will give more, but all will give some."