Let’s discuss a Universal Basic Income

Rent in Malta has been skyrocketing in these past few years, but our pay has been relatively low. According to Eurostat, the Maltese minimum wage is around €777.10 a month, and the average apartment costs around €600 a month. If your pay goes any higher then it ends up getting taxed at 15%. While most people own their own home, it is becoming more and more difficult for people to actually buy their own place. It is also problematic that people are spending more and more of their income either on rent or to service their loans. While spending 25% of one’s income on housing is generally considered reasonable, that percentage has been increasing year after year, to over 30% and even 50% sometimes.

So, how can we fix this problem? One solution is to introduce a form of Universal Basic Income (UBI). What is universal basic income? UBI is a government programme that would give every Maltese resident a basic monthly payment that’s not taxed, to cover living expenses. If we give every Maltese worker a small sum of say €400 – €500 a month (of course the exact amount needs discussion and planning), that is not taxed, this can drastically improve their life. It could be set aside for rent or loan repayment, or else spent on basic foodstuffs.

Universal Basic Income has been gaining popularity around the world. Former US presidential candidate Andrew Yang ran on a UBI platform. Former Greek minister Yanis Varoufakis said that “Universal basic income is a brilliant idea”. Political parties such as the Green Party of England and Wales and the Greens, the Centre Party and the Left Alliance in power in Finland are advocating for a type of Universal Basic Income.

How could we pay for it? We can explore a much needed reform of the taxation system. It could be financed by taxes on carbon and pollution, and a financial transaction tax on financial speculation. What are the benefits of introducing UBI? It could help people who are struggling to make ends meet, to plan their spending better. It can also help the local economy since most of the money, especially if it is say a debit card which can be used only within a certain region, will be spent locally on essential stuff. If, say, a parent decides to stay at home and take care of the kids, they would be able to do so.

What are the issues with UBI? Many critics of UBI say that it would make people lazier or spend their money on gambling or drugs. But is there any truth to this? In 2013 the World Bank conducted a study where they gave their participants money in the form of cash and found that poorer people are less likely to waste their money. There are other measures which need to be taken as well. The state should invest more in community housing. I would also propose a cap on rent prices, calculated on the landlord’s expenses and a reasonable income from the rent. If landlords can charge whatever they want, what’s stopping UBI from becoming a government-issued subsidy for landlords?

One thing is clear, our economy needs a shake-up. Not just in Malta but all over Europe and indeed the world. In my opinion we need to encourage and facilitate worker owned businesses, social cooperatives and other alternative forms of ownership. The concentration of wealth in the hands of the few is unacceptable; it leads to injustices and exploitation, of people, of workers and of nature.

Travis Camilleri
ADŻ Secretary General
Published in The Malta Independent – Sunday 24 January 2021