Taxpayers to foot the bill for proposed R243 billion universal income programme in South Africa

An economic recovery program, which is due to be presented by president Cyril Ramaphosa this week, indicates that government is considering the introduction of a basic income-grant.

The more than 100-page document, which has been seen by Bloomberg, indicates that the introduction of a basic-income grant could cost R243 billion a year and would necessitate tax increases.

In July, minister of Social Development 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 last week 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 Department of Social Development said that to address this, it is working on policy proposal on the feasibility of income support to South Africans between the ages of 18-59 who have no income support.

“This is a result of the introduction of the Special Covid-19 SRD grant that has revived the discussion of the feasibility of a Basic Income Grant (BIG) as was recommended by the Taylor Report in 2002,” it said.

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.

Grants extension 

A group of more than 80 civil society groups have called on government to extend and increase both the R350 Covid-19 Social Relief of Distress (SRD) grant and the caregivers grant to R585 per month until the country has
a comprehensive plan for guaranteed basic income.

The group said that the SRD grant has brought millions of previously excluded people into the social security system, providing crucial support for millions directly, and indirectly benefiting many more.

Job losses have affected underpaid workers, women, informal workers, and those in rural areas the most and the primary claimants of the Caregivers grant have been women, it said.

“Without immediate intervention, these benefits will be terminated at the end of October, causing a humanitarian crisis with approximately 6.8 million people plunged below the food poverty line. Thus, both these grants must be extended as a matter of urgency.”

Based on available estimates and assumptions of 5.6 million and 7.1 million respectively, the extension of the SRD grant and Caregiver grant at R585 per month will cost a combined R37 billion, the group said.

“All available information clearly suggests that the government has decided not to extend the grants at the end of October. Government’s decision to terminate the relief measures is irresponsible and reprehensible given the socio-economic realities of our country. This decision must be reversed.”

The group called on the government to:

  • Extend both the SRD grant and Caregivers Allowance by – at least – five months until the end of the financial year (March 2021).
  • Increase the SRD grant and the Caregiver Allowance grant to the Food Poverty Line of R585 per month.
  • Reassess the criteria for accessing the SRD grant to provide more people with support, and fix the administrative problems as a matter of urgency.

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