DUMA GQUBULE: Basic income grant and jobs are not mutually exclusive
The new finance minister seems to have done a U-turn on the need for this type of support
Let me try this again. Assuming a likely 60% uptake, implementing a basic income grant (BIG) will cost: R144bn at the food poverty line of R585 a month; R206bn at the lower poverty line of R840; and R311bn at the upper poverty line of R1,268, according to the Institute for Economic Justice (IEJ). The BIG should be phased in over three years at the three poverty lines so there is an ongoing stimulus to the economy that is not exhausted after one year.
Since a national budget does not operate like a household budget, we cannot have a static accounting analysis of the grant. A dynamic economic analysis must take into account fiscal multipliers — the additional GDP generated by each rand of new spending. In a recent book, World Bank economist Ugo Gentilini and others say these multipliers range from 0.8 to 2.52. The grant will generate tax revenues that would not have happened without it...
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