Basic Income Grant Essay

738 words - 3 pages

Basic income grantSocial impactSocial system is most successful when measured against destitution (poverty). Simply shows that BIC will grants do help South Africans in taking them out of complete poverty and placing them in positions where they can now afford to put food on the table..Households that receive this are more likely to have access to education and health facilities as they can now afford transport fees. Contribute to equity and social cohesion.Enhance responses to the HIV/AIDS pandemicUniversal Coverage -not subject to a means test, which would save government time and money. The Basic Income Grant requires substantially less administrative resources- no "means test", targeting through the tax system (Cost effective!)Providing all South Africans with an economic stake improves social stability and reinforces the foundations for more investment and economic growth.Effective social security reform is developmental and affordable, generating a positive growth impact that promotes job creation while improving the effectiveness of social delivery and long term sustainability.Stigmatisation-recipients are'nt labelled as poorWill increase labour participation: active job seekersCombats poverty tax: more sidposable income for poorThose who don't need grant wont register for itIncome and substitution effectsIncome effects:More income from grant will lead to less hours people willing to work. Might use the time and money that the income grants them for job search further away rather than being employed in a low wage job.Another effect is that workers that receive social assistance are more productive due to access to better nutrition, healthcare, housing and transportation. Employer will be willing to pay higher wages as result of productivity.Two effects on savings levelFirst argument:Saving s rate is negatively related to social grants because the higher income groups get taxed in order to raise the funds to give the social grant which are distributed to low income groups. Higher income groups still receive grant but lower income do not get taxed and only receive it. (Unemployed)Second argument:Savings positively related to social grants because an increase in income will meant that goods are easier to obtain locally with the aid of grants. Therefore, there are decreased capital inflows needed to facilitate trade deficit when imports are greater than exports. Therefore, increased savings. IN...

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