Time for a universal basic income in PH

To address widespread poverty and unemployment, perhaps we should look into the possibility of a universal basic income (UBI) in the Philippines. UBI means allocating a portion of tax revenues and redistributing it to all adult citizens. I’m looking at having P1,500 per month given to all adult citizens, with a use-it or share-it mechanism.

UBI is founded on the concepts of universality (everyone should get a benefit, similar to how everyone gets PhilHealth), simplicity (eliminating conditions to make it easier to administer), and autonomy (trusting citizens to decide what they need).

The state looks out for the wellbeing of its people and the environment, and they conduct programs to aid that objective.

In terms of health and the environment, the state does and can impose alcohol, tobacco, sugar, carbon, and plastic taxes to discourage people from consuming these items. These products have a detrimental effect on people’s health and the environment, but they are also in a lot of basic goods that the poor consume, so we are posed a dilemma: How can we discourage bad health and environmental behavior, but not hurt the poor?

Having a UBI along with “sin” taxes softens the transition from buying unhealthy to healthy products, and environmentally harmful to environment-friendly products. The long-term effect would be an increase in the price of these undesired products and services, and an increase in the accessibility of desired products for the poor because of the UBI. Purchasing expensive, undesirable products and services will be a personal decision, with the additional income from taxes going to more health and environmental programs such as health education, prevention, and treatment, and environmental infrastructure.

A UBI provides more flexible taxation policies to achieve better health for our people, while still addressing the regressivity (anti-poor nature) of most of our taxes.

My ultimate preference is to zero out income tax and to redirect taxation to value-added tax (VAT) and VAT-like taxes. Taxation will be heavily focused on those who consume more instead of those who earn more. With zero income tax, there would be no disincentive to work more and provide more value to society, as citizens keep their income. The taxes are collected at the end of the value chain, giving citizens more control over where they will get taxed.

The resulting law should cover implementing a UBI system, decreasing personal income taxes, and increasing VAT, health, and environment taxes. The net result would be a law that is similar to the TRAIN law, but with UBI included. The UBI is for all instead of the TRAIN law’s unconditional cash transfer to the poor.

Ultimately, the UBI will serve as an income floor for our people. Since the amount provided is fixed, it will always be worth more to the poor than to the rich: A UBI of P1,500 is 15 percent of the minimum monthly wage, while being less than 1 percent of a rich person’s monthly salary. VAT and VAT-like taxes (percentages) always tax the rich more, as they are the ones consuming more. The combination of UBI and VAT effectively implements a progressive taxation policy.

The tax rates, UBI amounts, and how fast each is implemented can be adjusted to achieve policymakers’ goals. Given this flexibility, the system I am proposing is the one I believe can most effectively address health, environment, and poverty issues, and it will only work with a UBI.

With the elections coming up, I hope that candidates will look into the UBI as a foundational program and a potential solution to our nation’s problems.

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Claro Arriola III is an industrial engineer by training and profession. He values efficiency and effectivity, which is why he’s drawn to programs such as UBI.