Taxpayers should foot the bill for a R1,500 basic income grant in South Africa: unions

The South African Federation of Trade Unions (Saftu) has reiterated calls for the introduction of a basic income grant as an long-term extension of the Covid-19 financial support currently being offered to South Africans.

In a presentation on Wednesday (24 September), Saftu secretary-general Zwelinzima Vavi said that the social grants currently being offered to citizens was ‘tokenistically low’.

“Threats to end these increases in October must be withdrawn. The Temporary Employee / Employer Relief Scheme (TERS) of R350 a month must be transformed into a Basic Income Grant of R1,500 at least, so as to boost effective demand for all South Africans.

“A rise in progressive taxation rates would allow a claw-back of all the funding,” he said.

In July, Social Development minister Lindiwe Zulu said that South Africa will introduce a universal basic income grant as part of a range of packages to help the country’s unemployed.

Zulu did not provide details of how the grant would be funded or its size, but told a virtual press briefing it would be paid ‘post-October’.

This announcement follows a parliamentary briefing in which the Department of Social Development noted that the demand for income support will go beyond the six month period covered by the R350 Covid-19 Social Relief of Distress (SRD) grant.

The pandemic prompted president Cyril Ramaphosa to announce a temporary top-up of those grants by up to R300, including a R350 unemployment grant, in late March.

The ANC has previously said that it will also look at the feasibility of introducing a basic income grant as part of a series of outcomes decided upon by its National Executive Committee (NEC).

According to a document seen by Bloomberg, the ANC proposes paying a R500 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.

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

Cost 

Intellidex analyst Peter Attard Montalto said that debate around a basic income grant has been ongoing for around 20 years, and has even been a subject of previous research, which found it could reduce poverty in the country by as much as 75%.

However, the big problem is affordability.

Under the current proposals, a basic income grant would carry the following criteria:

  • It would be payable to anyone aged 18-59, however, it would start from 18-24 and 50-59.
  • It would be around R500 per month.
  • It would not be based on unemployment but would be available to anyone not receiving any other benefit, including UIF support.
  • It would be administered by SASSA who pays the current grants via a pre-paid card-based system.

Assuming the grant was R500 per month, as proposed by ANC policy makers, the maximum cost would be around R210 billion a year for the full age range, or starting at R77 billion for the narrower set of ages.


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Taxpayers should foot the bill for a R1,500 basic income grant in South Africa: unions