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Universal Basic Income Programs: How Much Would Taxes Need to Rise? Evidence for Brazil, Chile, India, Russia, and South Africa

Author

Listed:
  • Ali Enami

    (The University of Akron)

  • Ugo Gentilini

    (World Bank)

  • Patricio Larroulet

    (CEQ Institute and CEDES)

  • Nora Lustig

    (Tulane University)

  • Emma Monsalve

    (World Bank)

  • Siyu Quan

    (Tulane University)

  • Jamele Rigolini

    (World Bank and IZA)

Abstract

Using microsimulations this paper analyzes the poverty and tax implications of replacing current transfers and subsidies by a budget-neutral (no change in the fiscal deficit) universal basic income program (UBI) in Brazil, Chile, India, Russia, and South Africa. We consider three UBI transfers with increasing levels of generosity and identify scenarios in which the poor are no worse off than in the baseline scenario of existing social transfers. We find that for poverty levels not to increase under a UBI reform, the level of spending must increase substantially with respect to the baseline. Accordingly, the required increase in tax burdens is high throughout. In our five countries and scenarios, the least increase in taxes required to avoid poverty to be higher than in the baseline is around 25 percent (Brazil and Chile). Even at this lower rate, political resistance and efficiency costs could limit the feasibility of a UBI reform.

Suggested Citation

  • Ali Enami & Ugo Gentilini & Patricio Larroulet & Nora Lustig & Emma Monsalve & Siyu Quan & Jamele Rigolini, 2021. "Universal Basic Income Programs: How Much Would Taxes Need to Rise? Evidence for Brazil, Chile, India, Russia, and South Africa," Working Papers 2108, Tulane University, Department of Economics.
    • Handle: RePEc:tul:wpaper:2108
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    References listed on IDEAS

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    1. Silveira Neto, Raul da Mota & de Siqueira, Rozane Bezerra & Candido, Carlos Henrique de Sousa & Nogueira, José Ricardo, 2024. "Spatially blind but regionally progressive? Effects of a universal basic income on regional welfare inequality in Brazil," Revista Brasileira de Estudos Regionais e Urbanos, Associação Brasileira de Estudos Regionais e Urbanos (ABER), vol. 18(1), pages 1-23.
    2. John R. Scott & Ricardo Massa & Ana Cecilia Parada, 2024. "Distributive Impact of Green Taxes in Mexico," Working Paper d237a40f-8742-49a5-b30a-0, Agence française de développement.

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    More about this item

    Keywords

    Universal basic income; microsimulation; inequality; poverty; tax incidence;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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