A UNIVERSAL BASIC INCOME FOR BRAZIL: FISCAL AND DISTRIBUTIONAL EFFECTS OF ALTERNATIVE SCHEMES

Siqueira, Rozane Bezerra de; Nogueira, José Ricardo Bezerra

doi:10.1590/198055272701

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Brasil

Revista de Economia Contemporânea

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Articles • Rev. econ. contemp. 27 • 2023 • https://doi.org/10.1590/198055272701 copy

A UNIVERSAL BASIC INCOME FOR BRAZIL: FISCAL AND DISTRIBUTIONAL EFFECTS OF ALTERNATIVE SCHEMES

UMA RENDA BÁSICA UNIVERSAL PARA O BRASIL: EFEITOS FISCAIS E DISTRIBUTIVOS DE ESQUEMAS AALTERNATIVOS

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

The Covid-19 pandemic outbreak has led to an increasing interest in universal basic income (UBI) proposals, as it exposed the inadequacy of traditional welfare systems to provide basic financial security to a large share of the population. In this paper, we use a static tax-benefit microsimulation model to analyse the fiscal and distributional effects of the hypothetical implementation in Brazil of alternative UBI schemes that partially replace the existing tax-transfer system. The results indicate that introducing a UBI/Flat Tax system in the country could be both extremely effective in reducing poverty and inequality and economically viable.

KEYWORDS:
Universal basic income; inequality; poverty; microsimulation

Incomes, transfers, and taxes	Current system
Incomes, transfers, and taxes	(2017)	Scheme 1	Scheme 2	Scheme 3
Initial (market) income	2,571	2,571	2,571	2,571
Current transfers	804
Pensions	717
Others	87
Current tax revenue	357
Personal income tax	192
Employee social security contribution	165
Current disposable income	3,018
UBI gross cost		1,009	969	969
Reduction in current transfers		251	335	335
UBI net cost		758	634	634
Tax revenue under UBI		1,115	991	991
Disposable income under UBI		3,018	3,018	3,018
Income tax rate under UBI (%)
Flat/Standard		35.7	32.6	47.5
Reduced		-	-	20.0

Inequality and poverty indices	Current system (2017)	Scheme 1	Scheme 2	Scheme 3
% of individuals in poverty
Total population	23.5	0.0	8.0	6.8
% reduction	-	100.0	66.0	71.1
Children (< 18)	39.7	0.0	17.6	15.0
% reduction	-	100.0	55.7	62.2
Working age (18-64)	20.5	0.0	5.5	4.7
% reduction	-	100.0	73.2	77.1
Old age (≥ 65)	3.2	0.0	0.3	0.2
% reduction	-	100.0	90.1	93.7
Gini coefficient of inequality	0.506	0.377	0.408	0.373
% reduction	-	25.5	19.4	26.3

Deciles	Winners	Baseline income	Gain	Losers	Baseline income	Loss
Deciles	%	R$/month	R$/month	%	R$/month	R$/month
1	100	119	341	0	-	-
2	100	291	273	0	-	-
3	100	430	222	0	-	-
4	98	564	168	2	558	79
5	90	716	134	10	715	41
6	76	892	99	24	921	93
7	45	1,077	65	55	1,059	149
8	27	1,307	39	73	1,381	129
9	3	1,793	45	97	1,933	255
10	1	3,260	48	99	4,776	788
All deciles	64	565	194	36	2,360	342

Deciles	Winners	Baseline income	Gain	Losers	Baseline income	Loss
Deciles	%	R$/month	R$/month	%	R$/month	R$/month
1	100	119	253	0	-	-
2	100	290	199	0	-	-
3	99	430	168	1	446	38
4	96	564	134	4	562	60
5	91	715	107	9	723	52
6	77	894	82	23	918	64
7	46	1,074	60	54	1,062	88
8	29	1,317	43	71	1,380	101
9	5	1,824	51	95	1,935	206
10	2	4,353	72	98	4,776	627
All deciles	65	584	147	35	2,363	269

Deciles	Winners	Baseline income	Gain	Losers	Baseline income	Loss
Deciles	%	R$/month	R$/month	%	R$/month	R$/month
1	100	119	263	0	-	-
2	100	290	229	0	-	-
3	99	430	212	1	442	48
4	98	565	186	2	548	76
5	96	715	168	4	727	55
6	88	895	147	12	929	58
7	63	1,077	124	37	1,051	66
8	56	1,338	105	44	1.392	92
9	16	1,769	72	84	1,960	209
10	0	2,493	123	100	4,769	1,075
All deciles	72	639	185	28	2,669	468

Instituto de Economia da Universidade Federal do Rio de Janeiro Avenida Pasteur, 250 sala 114, Palácio Universitário, Instituto de Economia, 22290-240 Rio de Janeiro - RJ Brasil, Tel.: 55 21 3938-5242 - Rio de Janeiro - RJ - Brazil
E-mail: rec@ie.ufrj.br

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[1] Corresponding author: José Ricardo Bezerra Nogueira E-mail address: jrbnogueira@yahoo.com.br