New taxes needed to fund South Africa’s coming NHI: government

 ·10 Jun 2022

The government will ultimately need to collect additional taxes to fund its new National Health Insurance scheme, says health deputy director-general Nicholas Crisp.

Presenting the scheme to the parliament this week, Crisp said that a large part of the NHI’s funding will be made up through the reallocation of health funding as well as existing tax credits. He reiterated that there was already ‘a lot of money in the system’ and that this would be the basis of the funding as a starting point.

However, he noted that in time, additional taxes would need to be introduced to help fund the NHI scheme, including the possible introduction of:

  • An increase in value-added tax (VAT);
  • A change in general taxation;
  • Adding a payroll tax.

Crisp added that it is ‘highly unlikely’ that the country’s middle-class and wealthy taxpayers will pay more than they already do for private healthcare.

The opposition Democratic Alliance has warned that the planned NHI will be unaffordable and ultimately ‘break the backs of the country’s middle-class taxpayers.

“Only 9% of South Africans are contributing to 40% of South Africa’s total tax revenue. With no recent data to determine the impact that Covid-19 has had on the tax base, it is not difficult to see why funding the NHI from the fiscus will be difficult to achieve.”

South Africa’s national debt and unsustainably high budget deficit make it extremely impossible to consider adding a new multi-billion rand expenditure item in the form of the NHI, Clarke said. He added that South Africa must have this comprehensive assessment before continuing with the NHI Bill, the party said.

“It will affect the poorest of poor, break the back of the tax-paying middle-class and potentially bankrupt our economy.”

Read: South Africa’s economy is back to where it was before Covid – but citizens are becoming poorer

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