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South Africa Could Fund Basic Income Grant With Higher Tax Revenue

by Robert Lee, Tax-News.com, London

06 July 2001


Civil society groups in South Africa have been campaigning for a universal basic income grant of R100 per month, funded by a solidarity tax on the country's more wealthy citizens. Research has indicated that South Africa could easily fund the R40 billion a year proposed grant scheme without undermining its competitiveness or international status.

Under the proposed scheme, the middle and upper classes would cross-subsidise the grant, providing between R15 billion and R20 billion in the form of higher taxes. The director at the University of Cape Town Economic Policy Research Institute, Michael Samson, commended the plan as economically feasible and sustainable, saying that his beliefs were supported by numerous studies on the subject, and adding: 'The positive growth effects of effective social security reform [are] likelt to more than offset any negative impact of higher taxes.'

The coalition of groups campaigning for the basic income grant include the Confederation of SA Trade Unions, The Catholic Bishops Conference, and the South African NGO Coalition. This week, they handed a declaration on the scheme to Viviene Taylor, the head of the committee which is at present examining social security reform in South Africa, and is due to give its report to the government at the end of July.

The coalition says that if implemented, the grant would secure a basic standard of living for the 22 million or so South African citizens living below the breadline, and surviving on less than R144 per month.


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