The case for a universal basic income in South Africa: A conceptual approach

Abstract

This conceptual study investigates a model for addressing both poverty and income inequality, which is theoretically distinct from the traditional tax and transfer systems adopted by most jurisdictions. It does so against a backdrop of global uncertainty and ongoing challenges to the current economic landscape. The model investigated is known as universal basic income (UBI) which provides a minimum payment to all citizens of a jurisdiction. In doing so it decouples income from labour and removes any means or employment tests from the receipt of assistance. To adequately address this model, a theoretical rationale for such an approach is first discussed followed by an analysis of the advantages and disadvantages. Current and previous experiments of UBI in Alaska, Switzerland, Canada, Finland, Kenya and Namibia are outlined and analysed. This is followed by a case study for the introduction of UBI in South Africa, with the conclusion that such a model is not outside the realm of political will or practicality.

Keywords:

• tax and transfers
• universal basic income
• poverty
• income inequality
• distributive justice

Notes

1 Most jurisdictions adopt a system which involves taxation as the primary means of financing welfare, hence the phrase ‘tax and transfer system’. Social security, generally in the form of a means and/or work test is then used to distribute the revenue collected.

2 Citing Van Parijs. P. (1992). Competing justification for unconditional basic income. In: Van Parijs P (ed.) Arguing for basic income: Ethical foundations for a radical reform (pp. 3–43). London: Verso.

3 The gig economy is a part of the economy where temporary and flexible jobs are common due to companies preferring to hire freelancers and independent contractors (Chappelow, 2019).

4 Pigouvian taxes are designed to offset externalities, that is, consequences and social costs of production or consumption activities, by requiring businesses and consumers to internalise the costs of these externalities.

5 A Basic Income Grant is a synonym for Universal Basic Income.

6 Upper-bound poverty line – R1 227 (in April 2019 prices) per person per month. This refers to the food poverty line plus the average amount derived from non-food items of households whose food expenditure is equal to the food poverty line (Stats SA, 2019a).