BL Premium writes that with work stopped for millions by the coronavirus lockdown, the quickest and simplest way to provide wage support to employees in the formal economy would be for the SA Revenue Service (Sars) to use the tax system to pay employers a portion of workers’ wages automatically.  

This recommendation comes from the Covid-19 Economists Group, a network of economists who are supporting efforts to deal with the economic effects of the pandemic.  Employers, labour and the government have negotiated a special Covid-19 benefit to be paid through the Unemployment Insurance Fund (UIF) for employers to disburse.  But there is deep concern over the capacity of the fund to handle the administration of the benefit.  In a paper written by Economists Group convener Miriam Altman, it is recommended that the benefit be paid out to employers automatically on the assumption that all companies are affected by the lockdown.  Where companies are not affected or did not shut entirely, the payments would be clawed back through tax returns.  The importance of acting quickly to keep firms afloat and keep employees tied to their firms cannot be emphasised enough, Altman stressed.  She further pointed out:  “A payment across the board has some advantages.  It is rapid and creates certainty for the firm and for employees and gives them faith of returning to some normalcy; and it is stimulatory as workers in lower tier of the labour market will fully spend the amounts, mostly on domestically produced goods.”

• Read the full original of the report in the above regard by Carol Paton at BusinessLive (paywall access only)

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