The Basic Income Grant (BIG) Coalition on Friday said that Finance Minister Trevor Manuel should get his facts and figures straight.
The coalition made up of the Congress of South African Trade Unions (Cosatu), the South African Non-Governmental Organisation, the Black Slash and the Treatment Action Campaign was responding to the remarks made on Thursday that it will cost the country an estimated R90-billion per year to provide an income grant to all South Africans as a means of poverty alleviation.
In response to a question as to why South Africa did not extend the social grant which already reaches 11-million people out of 46-million, Manuel said there were proponents of the basic income grant who said that every man, woman and child in South Africa should get R100 or R150 per month. If that was implemented, it would cost in the region of R90-billion rand per annum, which would bankrupt the country.
“Minister Manuel has once again thrown a figure of R90-billion as the cost of a basic income grant into the public domain. We would like to again point out that four leading economists commissioned by the BIG Coalition to calculate the net cost of a basic income grant, concluded that a such a grant would require between R15 and R32-billion per year, depending on how funding for the grant is recovered from wealthier households through the tax system,” BIG National Coordinator Reverend Edwin Arrison said.
He said that based on the research conducted by the economists, the BIG Coalition insists that Minister Manuel is ignoring certain facts about the cost of a grant.
The coalition argues that a grant is foundational to other grants.
“In other words, people currently receiving grants would not receive a BIG on top of that; this already cuts a significant amount off the estimated R90-billion,” the group said.
“If a BIG is implemented incrementally — firstly to all children up to the age of 18 years — this will make the cost to the state less on an annual basis, but would still include the cost of administration because of means-testing.
Such means-testing costs would fall away if the BIG is introduced to all South Africans.”
The coalition pointed out that there is a difference between the gross cost and the net cost of a BIG.
According to the BIG Coalition, the minister spoke only about the gross cost but refused to acknowledge that those on the tax system would be expected to pay back towards the BIG.
This again would make the estimated R90-billion much less, the group said.
“There are possibilities for financing a BIG within the current macro- economic and fiscal framework. One option is to increase the GDP: tax ratio by 1-2%, instead of giving back to those who already earn a good income. Raising VAT on certain luxury items is another option.
“It is urgent that we seriously address poverty in South Africa. A BIG is affordable and Minister Manuel is simply being alarmist, while restricting creative debate on the financing and sustainability of a BIG. We again urge the minister to listen and engage more constructively with the facts and to refrain from making irresponsible public statements that have very little basis in fact,” said Reverend Arrison. ‒ I-Net Bridge