The Assembly of the Unemployed and other civic organisations have continued to urge President Cyril Ramaphosa to implement a permanent basic income grant, and said it was “disheartening” that experts advised against it.
A report of the Presidential Economic Advisory Council (PEAC) presented to Ramaphosa on January 13 was leaked to the media. The report issued a strong warning to Ramaphosa not to implement a permanent basic income grant due to the risks it holds for the country and the damage it would do to economic growth and job creation.
According to news reports, the council criticised the expert report commissioned by the Department of Social Development that concluded a basic income support grant was sustainable for the economy.
That panel was chaired by University of the Witwatersrand professor Alex van den Heever, who recommended the R350 should be made permanent and extended to more people. After that, it should gradually increase towards the food poverty line of R595 a month.
The report – which PEAC deemed “technically flawed” and had “grossly underestimated the risks” – stated that the only way a permanent grant would be possible was to raise taxes, suggesting that increases to both personal income tax and VAT would be necessary.
Since the start of the Covid-19 pandemic, there has been mounting pressure by civil society groups for Ramaphosa to convert the temporary R350 Covid-19 social relief of distress grant into a permanent income support for adults aged 18 to 59. Groups have called for the grant to be increased to R1 500.
However, a report by PEAC, which includes a group of high-powered independent experts selected by Ramaphosa who report only and directly to him, said tax increases of such magnitude would kill economic growth, investment and job creation.
According to the news reports, PEAC reported that while it recognised the role that grants had played in alleviating poverty, South Africa did not have the fiscal means for a new social grant.
The report has since received a strong backlash from civic organisations.
The Assembly of the Unemployed (AoU) said it was disappointed in PEAC’s advice as it and other civic society movements have campaigned “tirelessly” for the implementation of a Basic Income Grant.
“This would bring much-needed relief to millions of South Africans who are languishing in poverty.
“It is disheartening to hear that the so-called independent experts are choosing to turn a blind eye to the realities faced by millions of poor and unemployed South Africans. We reject the notion that is being pushed by the economic advisory council that this country cannot afford a Basic Income Grant,” the group’s statement read.
It called on the government to tax the rich, “who have become even richer during the pandemic”, in order to address the deep inequalities the country is grappling with.
“We call on President Ramaphosa to disregard such anti-poor sentiments and tackle illicit financial flows, profit shifting and wage evasion. Halting profit shifting by transnational corporations would help to raise more than R100 billion a year,” the AoU said.
In a joint statement issued by the Institute for Economic Justice (IEJ), Black Sash, Studies in Poverty and Inequality Institute (SPII), Amandla.mobi, and #PayTheGrants earlier in the week, the groups said they had met with Ramaphosa, Minister of Social Development Lindiwe Zulu, and Finance Minister Enoch Godongwana recently to discuss the extension of the R350 grant.
They said they also proposed that a presidential expert panel be appointed to review and consider existing research for the optimal design, infrastructure and financing for implementing a Basic Income Guarantee in South Africa.
On Saturday, acting Presidency spokesperson Tyrone Seale released a statement condemning the leak of the report. He said the advisory council presented the report to Ramaphosa on January 13, and that the effect of the leak “has been to allow for selective quotation from the document, often out of context, to support various agendas”.
“PEAC was established to provide the president with a range of expert perspectives on the country’s economic policies. All reports by PEAC remain confidential unless the Presidency decides to release the report for broader circulation,” Seale said.
Political Bureau