BIG Coalition: Tax the fat cats to help the poor

The Basic Income Grant (BIG) Coalition has suggested taxes on the rich such as inheritance tax, the introduction of sugar and fat tax and increased sin tax to support the country’s poor.

This is set out in a submission to finance minister Ipumbu Shiimi, who has allegedly given the coalition the cold shoulder since it submitted the document to his office on 15 July.

Rinaani Musutua, an advocate for economic and social justice with the BIG Coalition, said they are still waiting to meet with the minister. “He told us to make an appointment with his office. We asked them for an appointment and they ignored us,” she said.

Shiimi was not reachable for comment yesterday.

Tax adjustments

According to the coalition, if the grant is implemented, every Namibian will get N$500 per month - regardless of their level of income. It added that tax adjustments would allow the government to bankroll the initiative.

In a submission to the government, the coalition said the total gross cost of an “unconditional basic income grant” of N$500 per person per month for Namibians under 60, with a targeted population of 2.39 million, would amount to N$14.36 billion annually.

“BIG can partially be recovered through adjustments in personal income tax. About 12 500 individuals earn more than N$1.5 million annually. While receiving the BIG, they could pay back around N$2 000 per month as a redistributive measure. This would result in revenue for the government of N$300 million annually,” the submission read.

The BIG Coalition added that those earning N$1 million to N$1.5 million annually would pay N$1 500 per month, those earning N$500 000 to N$1 million annually would pay N$1 000 per month and those earning N$300 000 to N$500 000 annually would pay N$600 per month to fund the scheme.

Those earning N$200 000 to N$300 000 a year would be required to hand over the N$500 they receive as a BIG every month, while all Namibians earning less than N$200 000 a year would be exempt from funding the grant, and would still receive N$500 a month.

According to the organisation, this system would save costs and ensure that the beneficiaries are those in lower income categories, and that the grant has a redistributive effect.

It further recommended that integrating smaller grants into a universal BIG would cover the current expenditure of the existing child grant, the Harambee cash grant as well as feeding programmes for marginalised communities and drought relief.

Alaskan, German model

“Namibia could consider following the Alaskan-style natural resource dividend fund model to finance BIG by using natural resources, for example mining and fishing taxation revenue, as Namibia has under-taxed valuable resources,” the submission read.

The coalition has further suggested the introduction of inheritance tax and capital gains or acquisitions tax, “like Germany introduced a solidarity surcharge (Solidaritätszuschlag) during the unification of [that country] to help bring the standard of living of the eastern part of Germany [on par with] that of the western part”.

“Namibia can also introduce sugar and fat tax and increase sin tax,” it said, adding that the state can “improve resource management and utilisation in government institutions” as well as increase the tax on luxury goods.

Further suggestions include dedicating a portion of the country’s Southern African Customs Union (SACU) revenues “to finance BIG and reduce corruption”.

“There are endless possibilities. A BIG programme can be funded without increases to value-added tax (VAT). A combination of a relatively small wealth tax and the reduction of illicit financial flows can provide the necessary complementary resources that enable the government to introduce and sustain the programme over time.”

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