Abstract
The high cost and coverage gaps resulting from
South Africa’s social security system
motivates the need to consider alternative social
assistance programmes. One alternative to the
current grant system (which is based on the means
test) is the Basic Income Grant. In contrast to
the means test, which selects a target group of
eligible beneficiaries, the Basic Income Grant
would provide social assistance to all South
Africans.
Research findings indicate that the extension of
a Basic Income Grant could potentially induce
positive socio-economic effects, for example, the
universal nature of the Basic Income Grant would
prevent coverage gaps and improve social
protection.
In light of the social and economic viability of
a Basic Income Grant, this paper aims to assess
the fiscal viability of the grant. Specifically,
the paper analyses the fiscal impact, evaluating
the affordability of the Basic Income Grant and
its impact on government finances.
The paper is divided into an introduction, four
main sections and a conclusion. The first main
section evaluates the magnitude of the fiscal
impact. The following three sections evaluates
the fiscal impact of a Basic Income Grant through
the analysis of various fiscal measures, namely
government expenditure (Section 3); tax revenue
(Section 4) and fiscal deficit (Section 5).
Section 6 provides a conclusion.
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