Modelling fiscal pathways to a basic income

The document argues that a Basic Income Grant (BIG) is affordable and sustainable for South Africa, potentially reducing poverty by up to two-thirds and increasing GDP growth from 2.2% to between 2.8% and 3.5% by 2030. It presents three modelling scenarios (low, medium, and high ambition) funded through a combination of wealth taxes, a social security tax, and increased VAT revenue generated by stimulated consumption. The analysis suggests that the net cost of a UBIG could be as low as 50% of its gross cost due to the 'multiplier effect' and tax clawbacks.

• Modelling of three BIG pathways from 2023 to 2030 indicates that a basic income is fiscally sustainable and positively impacts growth, poverty, and unemployment, with the potential to reduce the poverty rate by up to two-thirds within eight years.
• The implementation of BIG pathways is projected to increase GDP growth from a baseline of 2.2% to a range of 2.8% to 3.5% by 2030.
• A Universal Basic Income Guarantee (UBIG) paid to all adults aged 18-59 at the 2022 Food Poverty Line (R624 per month) would have a gross cost of R255 billion annually, though actual costs would be lower (R153 billion to R204 billion) if uptake is between 60% and 80%.
• The net cost of a UBIG could be as low as 50% of the gross cost due to the 'multiplier effect' of spending in poor communities, VAT returns (estimated at 12% of grant spending), and a social security tax (SST) which could cover approximately 25% of the cost.
• Proposed progressive financing mechanisms include a wealth tax on the top 1% (potentially raising R143 billion), a 25% VAT on luxury goods (R9 billion annually), a Financial Transactions Tax of 0.1% (R41 billion annually), and a Resource Rent Tax (over R38 billion per year).
• The high-ambition pathway aims for a grant value of 6x the Upper Bound Poverty Line by 2028-2030, covering about 45% of the working-age population, suggesting a fully universal basic income is achievable in the 2030s.

APA

Institute for Economic Justice (2024). Modelling fiscal pathways to a basic income. https://www.iej.org.za/wp-content/uploads/2024/02/IEJ-UBIG-8-factsheet-English.pdf

Chicago

Institute for Economic Justice. Modelling fiscal pathways to a basic income. 2024. https://www.iej.org.za/wp-content/uploads/2024/02/IEJ-UBIG-8-factsheet-English.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=Modelling fiscal pathways to a basic income |date=January 2024 |url=https://www.iej.org.za/wp-content/uploads/2024/02/IEJ-UBIG-8-factsheet-English.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2024modelling, author = {{Institute for Economic Justice}}, title = {{Modelling fiscal pathways to a basic income}}, institution = {Institute for Economic Justice}, year = {2024}, month = jan, url = {https://www.iej.org.za/wp-content/uploads/2024/02/IEJ-UBIG-8-factsheet-English.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }