WORK-related benefits should be scrapped and replaced by a basic income paid to everyone, a think tank has recommended.

In a report published today, Reform Scotland argues a "Basic Income Guarantee" would end the so-called welfare trap which can discourage people in receipt of benefits from taking a jobs.

The independent think tank also calls the distinction between income tax and National Insurance to end and for the creation of a new department - either UK-wide or devolved - to administer tax and welfare payments, merging functions performed by HM Revenue and Customs and the Department for Work and Pensions.

Under the plan, the basic income would be paid to everyone but only earnings above it would be taxed, in order to make work pay.

Reform Scotland called for a debate on the level the basic income guarantee should be set at and how much it should cost the state.

The idea - sometimes called a "citizen's income" - has been championed in the past by the Green Party, whose former head of communications in Scotland, James McKenzie, co-wrote the report.

Reform Scotland said the Greens' proposal for a £100 per week income for all adults and £50 for all children was "one option" but stopped short of endorsing it specifically.

The report costed the Greens' plan at £247billion across the UK - £12billion more than the £235billion it would save on benefits.

In Scotland, the policy would leave a £2billion shortfall.

Mr Mackenzie said: "Basic income is one of those ideas that should appeal right across the political spectrum.

"We should be making it easier for people to work who can and who want to, not penalising them. "Basic income does just that, as well as helping those who have caring responsibilities, or who want to volunteer or study."

He added: "There's a resurgence of interest in the idea around the world, especially in Europe, with proposals being considered in Switzerland, Holland, France and elsewhere.

"The principle is the same everywhere, but policy makers need to know more about the practicalities. "Now, for the first time, we are providing some detailed information about how it could work in Scotland, either after independence or after the devolution of the necessary powers."

Co-author Siobhan Mathers, a member of the Reform Scotland advisory board member and a former Scottish Liberal Democrat policy convener, said: "There is a great opportunity for Scotland to design a welfare system that best suits its needs in the 21st Century.

"We could leave behind the unnecessary complexity of the UK system and provide a fair Basic Income Guarantee for all. This would make any transitions in and out of work more manageable and provide a clear, fair safety net for all."