Parliament's most recent interest in a GBI has come through the introduction last year of House Bill C-223 and Senate Bill S-233, An Act to develop a national framework for a guaranteed livable basic income.
The PBO report, titled Distributional Analysis of a National Guaranteed Basic Income, used two definitions of the family unit: the nuclear family and economic family. The nuclear family was defined as a family consisting of an individual, spouse or common-law partner and their children under 18 if residing together. The economic family consists of a group of individuals related by blood, marriage or common law, or adoption/guardianship, living in the same dwelling.
The gross cost of GBI was estimated at $107 billion in 2025 for the nuclear family definition and $53 billion under the economic family unit definition. The behavioural cost would amount to $5 billion for the nuclear family and $3.6 billion for the economic family.
The PBO found that the GBI would reduce poverty rates, at the national level, by 34 per cent for the nuclear family definition and 40 per cent for the economic family definition in 2025, using the Market Basket Measure (MBM). In relation to the low-income cut-off, those numbers were 78 and 79 per cent, respectively.
“The GBI affects household disposable income progressively for both family types,” the report read. “The largest benefit is observed in the lowest income quintile, while higher income quintiles experience a loss in disposable income due to adjustments to the tax system and relatively lower GBI transfers.”
The PBO report assumed that existing federal and provincial tax credits targeting low-income individuals would be eliminated to offset these costs. As well, the updated poverty impact was lower than the 49 per cent previously quoted in a 2021 PBO report on a GBI.
“This reflects both a significant upward revision of the MBM threshold and that earnings of low-income families have not kept pace with the increased threshold in recent years,” the report said. “This finding suggests that more families are now classified as living in poverty according to the updated official rates, highlighting the growing challenges of meeting basic living standards.”
The $107 billion figure is higher than the $90 billion figure for the same period in the 2021 report, attributed to “higher inflation rates and lower growth in earnings for low-income families in recent years than previously anticipated.”
Further, the $53 billion figure was much lower because the economic family accounted for the earned income of all related individuals in a household, unlike the nuclear family. The higher aggregated income figure results in greater reductions in the GBI.
This reduction was partly due to a significant upward revision of the MBM threshold, now using the 2018 base instead of the 2008 one. The threshold reflected higher costs for housing, food, transportation and other necessities, and was updated to account for inflation, modern consumption patterns and regional cost variations, the report said.
Introduction of the GBI could affect labour supply by increasing the marginal effective tax rate (METR) and participation tax rate (PTR). The METR increase would result in a reduction in hours worked from lower-wage workers, an intensive margin response, the PBO noted. As well, the PTR increase would result in some workers leaving the workforce entirely, an extensive margin response.
“Hours worked decrease by 1.1 per cent for the economic family definition versus 1.4 per cent for the nuclear family definition,” the report said. “Similarly, payroll decreases by 0.4 per cent compared to 0.5 per cent.”
“The impact on payroll is less pronounced than on hours worked because the behavioural impact of GBI is more significant among low-wage workers, whose earnings represent a relatively small share of total payroll.”
The estimates in the report were said to be highly dependent on the design of the GBI program and fiscal offsets. The PBO’s assumptions used to model the analysis represented only one of many possible structures for the program. As well, the federal government may consider different methods to find GBI aside from various tax credit elimination and adjustment of basic personal amounts.
Further, the analysis was based on data and calculations made through Statistics Canada’s Social Policy Simulation Database and Model. The PBO noted that “demographic and income data for certain vulnerable groups who stand to benefit from the GBI may not be fully represented or accurately reflected,” as this model “likely does not capture the full scope of poverty in Canada.”
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