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October 11, 2021

Swiss residents to vote on $2,800 monthly basic income

Switzerland is considering a basic income for adults to help tackle the growing worldwide issue of rising income inequality.

The country will hold a referendum vote after a grassroots group submitted a petition with more than 100,000 signatures. They're hoping to grant adults an unconditional income of 2,500 Swiss francs ($2,800), which could mean a nice, regular yearly cheque of $33,600 a year without having to work.

To kick off the call for a referendum, the group added a unique touch by delivering a truckload of eight million five-rappen coins, one meant for every resident in Switzerland, in front of a parliament building. A date still needs to be set for the vote.

Switzerland is well-known for its strong social welfare programs. While the country's healthcare is one of the most costly since residents are treated for free, it still offers great service. The country has low unemployment and it is one of the wealthiest countries in the world. In 2009, Switzerland's social spending for the public and private sectors was 26.42 per cent of the country's entire GDP, which was slightly above the OECD average.

It's tricky to say whether a basic income is a good idea or not. One classic argument against it would be that it could lessen a country's productivity since residents are less inclined to work. But it's one possible solution to try lowering poverty levels.

Back in the 1970s, Canada tried a basic income at a Manitoba farming town with about 10,000 residents. Every household received an annual budget that was based on their income level. It turns out that a five-person household received about $18,000 a year, according to the Globe and Mail. Unfortunately, the income guarantee led to a slight decline to workers and needless to say, the town didn't continue its payments. It was the only experiment of its kind in North America.

But some developing countries have had success in reducing poverty with similar programs.

While it's difficult to tell how successful a basic income program would be, the cost of such a program would be expensive. If that would happen in Canada, it'd probably have to be funded by higher taxes.

Do you think a basic income in Canada is a good idea?

Josephine Lim, MSN Money

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...