||Last Updated: Apr 4th, 2020 - 12:11:41
Governments worldwide are resorting to draconian policies to force its populace to stay at home in their panic to stem the spread of coronavirus (COVID-19). Seeming to do something, they have not thought (pun intended) of the main reason why most people go to work, itís called MONEY. and money allows people to meet the basic necessities of life, namely food, clothes and shelter.
It therefore follows that channeling work-free money immediately into household hands will solve that problem and they (the governments) can focus on the real matter at hand.
Questions that arise are who are these people and how quickly can they get access to money?
This is easier for developed countries. One way is ask the credit-card companies to provide the list of customers that have made minimum or no payments in the past 3 months and based on the size of the household fund their accounts directly from government coffers. Another way to determine an amount is use on the concept of Universal Basic Income (UBI). Several countries have experimented with the idea so far Switzerland is the first and only country to have held a national referendum (2016).
Itís a lame excuse for say Canada to ask taxpayers who are not on the tax roll for direct deposit to submit information online, the Canada Revenue Agency (CRA) can access that information from commercial banks in short order and issue cheques to the so-called unbanked.
The multiplier effect is greater when money goes to consumers directly than its trickle-down effect from businesses. Canada has already automatically implemented wage subsidy to employers but is asking employees to apply online for Canada Emergency Response Benefit (CERB).
Household debt as a % of disposable income (2018)
For selected countries (1):
A 2019 survey by Bankrate found most Americans would be in a bind if they missed even one pay period and just 40% are able to cover unexpected expenses of $1,000.
Selected Country by Country Proposed Response
United States of America
- Internal Revenue Service (IRS) will automatically use 2018 or 2019 tax return to do rebate, no action required on the part of taxpayers
- Amount of $1,200 on adjusted gross income up to $75,000 per annum and reduced by 5% for each $100 earned in excess of $75,000 and completely phases out at $99,000
- Expands eligibility for Unemployment Insurance (EI) and provides an additional $600 per week on top of EI
- CERB will be administered by CRA, with taxpayer applying online on April 6, 2020. Funds to be disbursed 10 days after application
- Amount of $2,000 per month for four months (March 15- October 3, 2020) for people who lost jobs to COVID-19, were quarantined, or helping sick family member or working parents who stayed home because of school or day-care closure or laid off or have not received payment from employer. Payment extended to wage earners, contract workers and self employed individuals who would not otherwise be eligible for EI
- Those already on EI and sickness benefit are not eligible for CERB
- Supporting Employees with Transfer of Cash (SET CASH) program
- Amount $9,000 grant fortnightly, paid monthly (March 10- June 30, 2020) from month of application
- Eligible tax payers must have been laid off or terminated and taxable income is $1.5m or less
- Tax payers must apply online and it must be verified that statutory deductions were filed on their behalf at some point in the last three months
- Employers are required to fill out and upload P45 form identifying all laid off or terminated employees
The first thing is that all persons in society contribute to the tax pot and in the case of a health crisis the pandemic does not discriminate. It is demeaning to conduct means test and doubly so to subject people to the bureaucracy of revenue agencies in applying for benefits (except USA).
The EI benefit in Canada is 55% of income up to $54,200 or $573 weekly for between 14- 45 weeks; CERB is set at $500 weekly.
Minimum wage in Jamaica is $7,200 per week; SET CASH $4,500 weekly.
Deal with the matter of the life and death that this is, there will be time to sort it out by those left standing when the ashes to ashes and dust to dust settles.
Consumption increases when people are at stuck at home especially with nothing meaningful to do.
Encouraging people to stay home without immediate money is courting disaster.
Source: OECD National Accounts Stats (1)
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