Universal Basic Income Guarantee: Financing options analysis

This report by DNA Economics for the Institute for Economic Justice (IEJ) analyzes various progressive financing options to fund a Universal Basic Income Guarantee (UBIG) in South Africa. It evaluates the revenue potential of nine specific tax measures, including a Social Security Tax, Resource Rent Tax, and Luxury VAT, and models their impact on national debt and the primary balance over the Medium Term Expenditure Framework (MTEF).

• The report identifies nine progressive financing options for a UBIG, with the Social Security Tax, removal of pension fund contribution deductions, a broader Financial Transaction Tax, and a Resource Rent Tax having the highest revenue potential.
• A proposed Social Security Tax (SST) with tiered rates ranging from 1.5% for income up to R80,000 to 3% for income over R1 million is estimated to generate between R62.20 billion in 2022/23 and R65.60 billion in 2024/25.
• A Resource Rent Tax (RRT) of 25% on total resource rents is estimated to generate approximately R38.80 billion in 2022/23, R38.40 billion in 2023/24, and R38.30 billion in 2024/25.
• The report suggests a 25% Luxury VAT on non-essential goods, which is projected to raise R8.41 billion in 2022/23, increasing to R9.17 billion by 2024/25.
• Removing retirement fund contribution deductions for individuals earning more than R1 million per year is estimated to increase income tax revenue by R22.0 billion in 2022/23 and R23.2 billion in 2024/25.
• Selective removal of the Medical Scheme Fees Tax Credit for those earning over R500,000 per annum (specifically for the main member and first dependent) is estimated to save R11.80 billion in 2022/23 and R12.78 billion in 2024/25.
• Other proposed measures include increasing the Dividend Tax rate from 20% to 25% (est. R7.70bn to R8.60bn), implementing a 0.005% Currency Transaction Tax (est. R3.68bn to R3.83bn), and increasing the Securities Transfer Tax from 0.25% to 0.3% (est. R1.37bn to R1.45bn).
• The report finds that a UBIG aligned with the Food Poverty Line (FPL) with 60% coverage can be entirely financed by the proposed options, while other scenarios (such as 80% coverage) would result in shortfalls.
• Additional revenue of R50.85 billion could be raised through budgetary reprioritisation, including cancelling the Employment Tax Incentive (R4.8bn), clawing back irregular spending (R36.4bn), and increasing carbon tax (R2.0bn).

APA

Venter, F., Ismail, Z., Capazario, B., & Capazario, M. (2021). Universal Basic Income Guarantee: Financing options analysis. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2026/02/DNA_UBIG-Financing-Options_Final-report.pdf

Chicago

Venter, Fouche, Zaakirah Ismail, Bianca Capazario, and Michele Capazario. Universal Basic Income Guarantee: Financing options analysis. Institute for Economic Justice, 2021. https://iej.org.za/wp-content/uploads/2026/02/DNA_UBIG-Financing-Options_Final-report.pdf.

Wikipedia

{{cite report |last1=Venter |first1=Fouche |last2=Ismail |first2=Zaakirah |last3=Capazario |first3=Bianca |last4=Capazario |first4=Michele |title=Universal Basic Income Guarantee: Financing options analysis |publisher=Institute for Economic Justice |date=8 July 2021 |url=https://iej.org.za/wp-content/uploads/2026/02/DNA_UBIG-Financing-Options_Final-report.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{venter2021universal, author = {Venter, Fouche and Ismail, Zaakirah and Capazario, Bianca and Capazario, Michele}, title = {{Universal Basic Income Guarantee: Financing options analysis}}, institution = {Institute for Economic Justice}, year = {2021}, month = jul, url = {https://iej.org.za/wp-content/uploads/2026/02/DNA_UBIG-Financing-Options_Final-report.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }