Implementing a basic income grant in South Africa will undoubtedly alleviate poverty among the poorest of the poor – but navigating the intricacies of who qualifies and how much they should get is a minefield that risks blowing up in the government’s face.
published by Intellidex in partnership with business groups, Business Unity South Africa and Business Leadership South Africa.
The overall goal of the BIG would be to alleviate poverty. How to go about this, proponents of such a grant have differed greatly. Raising tax is the only theoretically viable way to fund a basic income grant , said Intellidex. Some options that have been mooted include hiking VAT, increasing income taxes, raising corporate taxes or drawing from higher excise duties.
Intellidex said that a BIG of any meaningful size will invariably make South Africa’s public finances even more unsustainable than they are now and, in the context of high interest rates and a steep yield curve, is likely to slow growth. In fact, “it is entirely possible that the implementation of a BIG could induce so severe a set of second-round effects that its full effect will be to deepen poverty by making it harder for South Africa’s economy to grow,” the group said.
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