Universal Living Dividend funding structure
To provide all UK citizens 18+ (excluding individuals with assets above £250,000) with a monthly dividend of £750.00, the Rational Party suggests the following reforms to existing tax and fiscal systems. Initiatives such as rent reform would substantially reduce Housing Benefit costs, the only uncertainty, how much fair-rent policies and expanded social housing could reduce expenditure.
Welfare Reform Savings - ULD replacing: Universal Credit; Jobseeker's Allowance; Working Tax Credit equivalents; Most in-work means-tested support.
Retained Welfare: Disability benefits; Enhanced sickness support; Child Benefit; Pension Credit; Other welfare programmes under review.
Estimated savings:
Total £102bn
Housing Reform Savings - (current Housing Benefit expenditure is heavily influenced by private-sector rents).
Assuming: Large-scale social housebuilding; Fair-rent regulation; Reduced temporary accommodation costs; Retention of support for single occupancy primary residences
Potential long-term savings:
Total £10bn (central estimate)
Wealth Tax - wealth Band Rate:
Total £100bn (moderate estimate)
Capital Gains and Personal Tax Reform - including:
Alignment of CGT and income tax rates; Dividend taxation reform; Restriction of reliefs; Additional higher-rate bands.
Total £35bn
Business Tax Reform - assuming:
Closure of avoidance schemes; Minimum effective corporate taxation; Removal of selected reliefs.
Total £20bn
Defence Spending Reform including scrapping Trident:
Reducing defence spending to 1.5% of GDP - source savings
Conventional spending reduction £17bn
Trident cancellation and related costs £8bn
Total £25bn
Drug Legalisation and Criminal Justice Reform - assuming regulated markets for:
Cannabis; Psilocybin; MDMA; Certain naturally-derived substances
Excluding:
Methamphetamine; Crack cocaine; Ketamine; man-made and designer drugs
Total £22bn
Tax Organised Religious Establishments inc. separation of Church & State:
Commercial and investment activities taxed under ordinary business rules:
Total £4bn
Parliamentary and Administrative Reform - including:
Prime Minister salary; Ministerial salaries; Advisers; Administrative streamlining; Greater devolution.
Total £3bn
Research Reprioritisation - retain:
Health; Wellbeing; Military research; Tech and Cyber research; AI and alternative systems; Climate mitigation. (Suspend most other publicly funded research such as space exploration)
TOTAL £10bn
Trade Expansion - enhanced trading arrangements with:
European Union; Canada; China; African economies; Asian economies; Australia and other suitable partners
Potential additional tax revenues:
Conservative £20bn
Central £45bn
Optimistic £60bn
Total (central estimate): £45bn
State Pension Reform:
Bbecause pensions could be phased out only for new labour-market entrants, short/medium-term savings are potentially £5bn. Long-term, those savings would become much larger.
Energy Bill Changes:
Use of windfall tax to reduce or remove VAT, Network and policy charges from household bills.
Estimated fiscal cost: -£8bn
TOTAL FUNDING AVAILBLE TO SUPPORT THE UNIVERSAL LIVING DIVIDEND (ULD) = £373bn
Fiscal Position - Item Amount:
Universal Living Dividend Cost = £378bn
Funding Available = £373bn
Annual Gap = -£5bn
Sensitivity Analysis - Scenario Result
Conservative additional assumptions + £20bn to £30bn = surplus @ £15bn to £25bn
Optimistic assumptions assumptions + £40bn to £50bn = surplus @ £35bn to £45bn
Conclusion
In this model, figures are based on central estimates only. The most important variables are:
1. Actual revenue from the wealth tax.
2. Housing Benefit savings achieved through rent reform and social housing expansion.
3. Additional tax revenues generated through deeper trade relationships with the European Union and other trading partners.
4. The behavioural and economic effects of the dividend itself, which could either increase tax revenues through higher consumption and employment or reduce some projected revenues if growth underperforms.