ANC considers additional tax to fund a R500 monthly income grant

 ·27 Jun 2020

South Africa’s ruling African National Congress is reconsidering a previously discarded proposal to pay all citizens an income grant, according to a party discussion paper.

The payment will help address rampant poverty and ward off social unrest, as the country grapples with the economic fallout from the coronavirus pandemic, according to the document that will be presented at a meeting of the ANC’s top leadership this weekend.

Paying a R500 ($29) monthly grant to those aged 19 to 59 who aren’t normally eligible for other aid would cost the state R197.8 billion a year, according to the document.

Between 50% and 60% of the money could be recouped by levying extra taxes on those with jobs, it said.

“Covid-19 has weakened and undermined the resilience and survival strategies of low and no-income households,” the paper said.

“The social, economic and political costs of not introducing a basic income grant in South Africa are more disastrous than the actual monetary costs.”

ANC spokesman Pule Mabe didn’t respond to calls or messages seeking comment.

The government normally makes welfare payments to pensioners, the disabled and impoverished children – a total of 18.3 million people.

While charities, the main opposition Democratic Alliance and some senior ruling party officials have called for the grant system to be extended to millions of others who fall outside the social security net, the government has previously argued that a more comprehensive system isn’t affordable.

In April, president Cyril Ramaphosa announced the introduction of R350 rand monthly payment for those left destitute by a lockdown that was imposed on March 27 to curb the spread of the coronavirus and couldn’t access other government support.

Those payments, which will cost R17 billion, are due to end in October and Finance Minister Tito Mboweni has warned that they can’t be a permanent measure.

The poorest 60% of households derive about a quarter of their income from grants. They are the primary source of income for 3 million households because so few people have work, according to the discussion paper.

It warned that the unemployment rate could rise to 50%, from the current level of 30.1%, and increased poverty and inequality could stoke violence.

Read: South Africans moving to Australia post Covid-19

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