'Government can afford BIG'
The Basic Income Grant Coalition says the gross cost of a basic income grant would be N$6.85 billion per year, or 9.4% of the current national budget.
ELLANIE SMIT
WINDHOEK
The Basic Income Grant (BIG) Coalition says calculations show that despite Namibia's current economic difficulties, a universal BIG is indeed affordable and will provide a much-needed economic stimulus and an effective anti-poverty measure.
The Coalition has welcomed the news that the government is considering implementing a basic income grant, saying they are convinced the state can afford a grant of N$500 per month per person.
The Coalition says one of the most important reasons why a BIG is cost effective is because of its universal nature, meaning that everyone between the ages of 19 and 65 will receive an income grant.
Giving everyone a grant makes the programme corruption-proof and cost-effective, it says.
The Coalition just because a person has a job, it does not mean they are able to make ends meet.
“We are convinced that the N$500 per person per month is affordable to government.”
N$4 billion
It says while some economists estimate the real cost of the BIG to be N$13 billion per year, it would actually only be about N$4 billion, or 5.5% of the national budget.
The actual gross cost of BIG would be N$6.85 billion, or 9.4% of the current national budget and about 4% of the GDP, if calculated at a rate of N$500 per person per month.
“The real cost would be derived from taxes paid on the actual gross costs. This is undoubtedly a substantial amount, but one needs to keep in mind that government will recover part of this expenditure almost immediately.”
According to the Coalition, a universal BIG would not only address poverty, but also provide an effective economic stimulus “from below”.
“If all Namibian children from birth until their 18th birthday are covered by the universal child grant, all Namibians from 18 to 59 would be eligible to receive the BIG. The only exceptions would be the recipients of the veterans' grant (about 20 000 people) and those receiving the disability grant (about 41 000 people) since they already receive state grants.”
This leaves the total number of people to receive BIG at about 1.14 million, it says.
The Coalition further says that when considering the initial costs of BIG, the net costs are substantially lower, because parts of the BIG costs will be recovered through VAT as the recipients of the grant will use some of the money to purchase goods and services on which VAT is levied, with the result that around 10% of the BIG payments will be recovered though VAT.
Secondly, about 300 000 Namibians earn above the personal income tax threshold of N$50 000 per year.
Taxes
“The BIG will be paid to all of them but can be recovered easily through income tax adjustments. Also, high-income earners could be taxed slightly higher to achieve a redistributive effect in favour of low-income earners.” It says provided that the finance ministry registers taxpayers efficiently, 25% to 30% of the BIG payment can be recovered though personal income-tax payments. A universal BIG would lead to improved educational outcomes, improved health and nutrition as well as lower crime rates, it believes.
“This all was empirically proven not only during the pilot project in Otjivero, Omaheke Region, but also in international cases such as in India and Brazil.”
WINDHOEK
The Basic Income Grant (BIG) Coalition says calculations show that despite Namibia's current economic difficulties, a universal BIG is indeed affordable and will provide a much-needed economic stimulus and an effective anti-poverty measure.
The Coalition has welcomed the news that the government is considering implementing a basic income grant, saying they are convinced the state can afford a grant of N$500 per month per person.
The Coalition says one of the most important reasons why a BIG is cost effective is because of its universal nature, meaning that everyone between the ages of 19 and 65 will receive an income grant.
Giving everyone a grant makes the programme corruption-proof and cost-effective, it says.
The Coalition just because a person has a job, it does not mean they are able to make ends meet.
“We are convinced that the N$500 per person per month is affordable to government.”
N$4 billion
It says while some economists estimate the real cost of the BIG to be N$13 billion per year, it would actually only be about N$4 billion, or 5.5% of the national budget.
The actual gross cost of BIG would be N$6.85 billion, or 9.4% of the current national budget and about 4% of the GDP, if calculated at a rate of N$500 per person per month.
“The real cost would be derived from taxes paid on the actual gross costs. This is undoubtedly a substantial amount, but one needs to keep in mind that government will recover part of this expenditure almost immediately.”
According to the Coalition, a universal BIG would not only address poverty, but also provide an effective economic stimulus “from below”.
“If all Namibian children from birth until their 18th birthday are covered by the universal child grant, all Namibians from 18 to 59 would be eligible to receive the BIG. The only exceptions would be the recipients of the veterans' grant (about 20 000 people) and those receiving the disability grant (about 41 000 people) since they already receive state grants.”
This leaves the total number of people to receive BIG at about 1.14 million, it says.
The Coalition further says that when considering the initial costs of BIG, the net costs are substantially lower, because parts of the BIG costs will be recovered through VAT as the recipients of the grant will use some of the money to purchase goods and services on which VAT is levied, with the result that around 10% of the BIG payments will be recovered though VAT.
Secondly, about 300 000 Namibians earn above the personal income tax threshold of N$50 000 per year.
Taxes
“The BIG will be paid to all of them but can be recovered easily through income tax adjustments. Also, high-income earners could be taxed slightly higher to achieve a redistributive effect in favour of low-income earners.” It says provided that the finance ministry registers taxpayers efficiently, 25% to 30% of the BIG payment can be recovered though personal income-tax payments. A universal BIG would lead to improved educational outcomes, improved health and nutrition as well as lower crime rates, it believes.
“This all was empirically proven not only during the pilot project in Otjivero, Omaheke Region, but also in international cases such as in India and Brazil.”
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