FINANCING OPTIONS FOR A UNIVERSAL BASIC INCOME GUARANTEE IN SOUTH AFRICA

The document proposes a suite of financing mechanisms to fund a Universal Basic Income Guarantee (UBIG) in South Africa, focusing on progressive taxation and the reduction of government waste. Key proposals include a ring-fenced Social Security Tax, a Resource Rent Tax on extractive industries, and a wealth tax for the top 1% of the population. The brief argues that many UBIG scenarios, particularly those aligned with national poverty lines, are immediately affordable without borrowing if these revenue-generating measures and VAT recoupments are implemented.

• The annual cost of a UBIG varies significantly by payment level and uptake; for all eligible people (34.1 million), the cost ranges from R239 billion at the Food Poverty Line (R585 per month) to R1.432 trillion at R3,500 per month.
• A proposed Social Security Tax (SST), ring-fenced for UBIG, would progressively levy between 1.5% and 3% of taxable personal income, potentially raising R67.29 billion to R70.97 billion depending on the scenario.
• A Resource Rent Tax (RRT) targeting the economic rent of extractive industries, such as mining, could generate between R38.30 billion and R38.80 billion, assuming a 25% tax rate on total resource rents.
• Wealth and property tax proposals include a wealth tax of 1% for the top 1% and 3% for the top 0.1% (estimated at R59 billion), a Financial Transactions Tax (FTT) of 0.1% (estimated at R41 billion), and increased estate duty rates up to 45% for estates above R146.89 million.
• Revenue could be increased by removing corporate tax breaks, including a 25% reduction in profit shifting by Multinational Corporations (R5.75 billion), cancelling the Employment Tax Incentive (R4.8 billion to R5.06 billion), and reversing the Corporate Income Tax reduction from 28% to 27% (R7.6 billion to R8.2 billion).
• Reducing government inefficiency could provide significant funding: a 30% reduction in irregular expenditure at national and provincial departments and SOEs would free up R36.4 billion per year, while a further 2.7% reduction in 'General Public Services' wasteful expenditure would free up R1.85 billion.
• Approximately 12% of UBIG expenditure is expected to be recouped by the state via VAT, as the lowest 70% of the population spends 81% of their disposable income on VAT-related items.
• The brief concludes that 17 UBIG scenarios at the Food Poverty Line, Lower-bound Poverty Line, and Upper-bound Poverty Line are immediately affordable without borrowing if a revenue of R250 billion is generated.

APA

Institute for Economic Justice (2021). FINANCING OPTIONS FOR A UNIVERSAL BASIC INCOME GUARANTEE IN SOUTH AFRICA. https://iej.org.za/wp-content/uploads/2026/02/FINAL-IEJ-policy-brief-UBIG-july2021.pdf

Chicago

Institute for Economic Justice. FINANCING OPTIONS FOR A UNIVERSAL BASIC INCOME GUARANTEE IN SOUTH AFRICA. 2021. https://iej.org.za/wp-content/uploads/2026/02/FINAL-IEJ-policy-brief-UBIG-july2021.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=FINANCING OPTIONS FOR A UNIVERSAL BASIC INCOME GUARANTEE IN SOUTH AFRICA |date=July 2021 |url=https://iej.org.za/wp-content/uploads/2026/02/FINAL-IEJ-policy-brief-UBIG-july2021.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2021financing, author = {{Institute for Economic Justice}}, title = {{FINANCING OPTIONS FOR A UNIVERSAL BASIC INCOME GUARANTEE IN SOUTH AFRICA}}, institution = {Institute for Economic Justice}, year = {2021}, month = jul, url = {https://iej.org.za/wp-content/uploads/2026/02/FINAL-IEJ-policy-brief-UBIG-july2021.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }