DA proposes ‘taxless’ basic income grant in South Africa

The opposition Democratic Alliance has outlined its proposal for a basic income grant in South Africa ahead of the national budget on Wednesday (23 February).

The DA said it has been a longstanding supporter of the idea of income support for the unemployed, and that a Basic Income Grant would provide an economic floor for the most vulnerable as well as put money directly in the hands of the people who are best placed to decide where to spend it.

However, the party stressed that such a grant should be funded by economic growth and cutting wasteful government spending – not through additional taxes on the population.

“The market makes better allocative decisions than the government. However, we are concerned that the country simply cannot afford to support a growing number of dependents in an environment of low growth and a shrinking revenue base,” it said.

“It would seem, therefore, that a Basic Income Grant would become increasingly feasible as an expenditure from the proceeds of growth, as opposed to increased taxes.”

As economic growth is realised, a Basic Income Grant would become affordable, it said.

“The DA has budgeted an additional R105 billion over the next three years for the introduction of a conditional Basic Income Grant.

“The grant would be made available on the understanding that it would only be provided when revenue generated from GDP growth is available. It would not be funded from additional tax.”

The DA said that a similar support package could also be available for the country’s poorest citizens through targeted spending cuts and savings.

It said that these cuts and savings could total as much R290 billion over three years:

• R140 billion from freezing the wages of public servants not covered by the Occupation Specific Dispensation;
• R60 billion from cutting “millionaire manager” positions in government;
• R15 billion saved by cutting the New Development Bank funding by R5 billion each year;
• R3.5 billion slashing VIP blue light security;
• R8.4 billion from digital spectrum auction;
• R1 billion shutting down the National Youth Development Agency;
• R60 billion over the MTEF period through more efficient procurement and a focus on reducing corruption.

“Achieving economic growth that generates jobs, especially after the devastating effects of a global pandemic, will test the mettle of our collective national resolve,” said the DA’s shadow minister of finance, Dr Dion George.

“It is a challenge that we have to confront head-on if we are to address the staggering levels of unemployment and increasing poverty among vulnerable groups in our country.”

Read: Unions to protest for wealth tax and R1,500 basic income grant in South Africa