The Institute for Economic Justice (IEJ) has called on the government to give South Africans above 18 years a once-off “universal basic income” of R4,500 as part of an emergency rescue package in response to the economic impact of COVID-19.
The research and policy advocacy group in its submission to the government said the Ramaphosa administration needs to unveil a R310 billion rescue package, commensurate with the minimum predicted fall in gross domestic product (GDP).
The South African Reserve Bank (SARB) has already predicted that South Africa’s economy will plunge by 6.1% this year.
The IEJ said its proposal for the universal basic income for all adults will cost R150 billion.
The lobby group also said the government should distribute 2 million food parcels a month for three month at a cost of R4.5 billion, and increase all grants by R500 for three months at a projected cost of R27.5 billion.
The IEJ also said the government should consider extending the child support grant to pregnant women.
To assist workers who are most hit by the virus – the IEJ said the government should put in a further R18.4 to the Unemployment Insurance Fund (UIF) – and that this function should be moved to the South African Revenue Services to make the process more efficient.
The accessibility of the UIF, which has R40 billion in reserve for employers and employees who find themselves in duress has so far frustrated applicants.
The IEJ also called on to extend credit facilities to businesses by R100 billion through private and developmental banks through loans supported by the SARB.
The IEJ said there are plenty of avenues for the government to explore to fund its proposed R310 billion stimulus package.
The IEJ suggests that the government launch a “COVID-19 social special solidarity bonds” and that the Public Investment Corporation should purchase an initial R50 billion of the bonds.
The IEJ also proposes that the private sector be required to also buy these bonds.
The organisation has estimated that if pension funds, insurance companies and unit trust invests a portion of the assets (2%) in the bonds, this would raise R140 billion.
A government bond is debt-based investment, where you loan money to a government in return for an agreed rate of interest.
In a proposal that is set to rattle the better-off individuals -, the IEJ proposes a 5% solidarity tax for those earning above R1 million a year – it says this would raise R48 billion.
The IEJ has also proposed that government use the UIF’s R100 billion surplus to fund the rescue package.
The National Treasury last week briefed Cabinet on its economic proposals, but Cabinet still has not made a final decision and will hold another meeting today.
