WIDER Working Paper 2024/56-Tax financing options for new social protection instruments: The equity implications of taxing more to expand the South African social security system

Table of Contents

• 1 Introduction 3
• 2 Data and methodology 4
• 3 Transfer instruments 5
• 3.1 Expanding the Social Relief of Distress grant 6
• 3.2 Implementing a basic income grant 6
• 3.3 Results 8
• 3.3.1 Incidence 8
• 3.3.2 Progressivity 10
• 3.3.3 Impact on poverty and inequality 10
• 4 Tax instruments 12
• 4.1 Personal income tax 13
• 4.2 Value-added tax 14
• 4.3 Surcharge on incomes 14
• 4.4 Financing scenarios 15
• 4.5 Results 15
• 4.5.1. Incidence 15
• 4.5.2 Progressivity 16
• 4.5.3 Impact on poverty and inequality 17
• 5 Tax and transfer packages 19
• 5.1 Net expenditures 19
• 5.2 Net cash beneficiaries 20
• 5.3 Poverty and inequality impact 21
• 6 Conclusion 22
• References 23
• Appendix A 25
• A1 Fixed percentage point increase 25
• A2 Fixed per cent increase 26
• Appendix B: BIG clawback through rebate reduction 27
• Appendix C: BIG transfers with and without clawback 29
• Appendix D: Efficiency of simulated tax and transfer measures 30