Concern over the new taxes that will fund South Africa’s NHI

Civil society group Outa has asked parliament to rewrite sections of the National Health Insurance (NHI) Bill to protect patients and block unreasonable extra taxes.

The group said that while universal health coverage is both a social and moral necessity for the country, the rights of taxpayers who will fund the NHI must be protected.

“Many taxpayers are concerned that the advent of the NHI will result in the erosion of their own healthcare,” it said.

“Taxpayers face potential tax increases to fund the NHI, along with the likely loss of existing rebates for medical expenses, and the prospect of ongoing out-of-pocket expenses.

“This places households in peril and raises justifiable concerns of the use of their tax money.”

Outa added that the bill is not clear enough about the sources of funding, which includes vague references to “payroll tax (employer and employee)” and “surcharge on personal income tax”.

It proposed that the surcharges suggested in the bill be capped or removed as a source of revenue.

“Surcharges can only be justified by proven efficiency and accountable, transparent financial management in government,” it said.

“Outa also proposes clearly defining the role and powers of the Bill’s Stakeholder Advisory Committee to combat tax abuse of the fund.”

Introduced at an ‘affordable pace’ 

Speaking at an event at the end of November 2019, finance minister Tito Mboweni said the NHI will be implemented at a pace that is affordable to the country.

He also confirmed that National Treasury is currently developing a financing paper on the NHI.

“The National Treasury has prepared a NHI financing paper, which lays out various scenarios for financing potential shortfalls for the NHI.

“However, there is still a lot that is being discussed between the Minister of Health and myself in order to make sure that we live up to the expectations.

“We are all committed to the NHI and the functioning of the National Health system. And therefore we should do all that we can to support the pace and the timeframes for the implementation of the NHI,” he said.

While Mboweni would not be drawn into responding to questions of how much the NHI is expected to cost, the National Treasury announced in its Medium-Term Budget Policy Statement last month that the health coverage roll-out will require an addition R33 billion annually from the 2025/26 financial year.

This would be in addition to the previous estimations contained in the Green and White Papers of 2011 and 2017 respectively, of R74 billion a year.

Mboweni said the draft paper has not yet been published as it still requires a lot of internal conversations within the National Treasury. Once finalised, the paper will be taken to a Cabinet committee, after which it will go to Cabinet.

While this takes place, there will be a simultaneous public participation process.

Read: Is South Africa on the verge of a tax revolt?