How the Basic Income Grant can boost the economy
SA’s Basic Income Grant might actually become a reality for underprivileged citizens. Experts argue that it can boost the economy.
Introduction of a Basic Income Grant in 2024 has been debated vigorously by government and economists for years now. On the one side you have the National Treasury saying such a grant administered by the South Africa Social Security Agency would cost billions more every year.
Then, in the other corner, civil society points out that millions of South Africans have no other tangible form of income. At last count there were roughly 28 million (45% of the population) people receiving social grants.
BASIC INCOME GRANT IN 2024
However, despite the bluster in Ramaphosa’s pro-poor rhetoric, the question remains: How do you suppose government can fund a Basic Income Grant in 2024? Keep in mind, only 7.1 million people pay tax – that’s just 8% of the population. 8% funding 45% of the population; the economics just don’t add up.
Nevertheless, Business Tech reports that the Institute for Economic Justice (IEJ) believes increased taxes for the wealthy will do the trick. Furthermore, a Basic Income Grant in 2024 would in fact boost the South African GDP by as much as 2.2%.
WHO WILL BE ELIGIBLE FOR THE GRANT?
All South Africans between the ages of 18- and 59-years old would be eligible for a Basic Income Grant in 2024 if they are sufficiently poor. Moreover, economists say the grant should be valued at the upper-bound poverty line of R1 417 per month. Those who receive Care Givers, Social Relief of Distress, War Veterans, Child Dependency Grants would still be eligible, too.
Just a 1% wealth tax on the country’s top income earners would net an additional R70 billion to fund it. Another possible funding model would a 2.5% Social Security Tax added to every wage earners paycheck. A third option would be an increase in Value Added Tax (VAT) at the tills. Although Minister for Social Development, Lindiwe Zulu, says this last option will negate its impact as citizens would effectively be funding their own grant.
Do you support the idea of a Basic Income Grant in 2024, or will it put too much stress on the country’s stressed tax base? Be sure to share your thoughts with our audience in the comments section below. And don’t forget to follow us @TheSANews on X and The South African on Facebook for the latest updates.