{"id":368884,"date":"2020-01-29T08:05:38","date_gmt":"2020-01-29T06:05:38","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=368884"},"modified":"2020-01-29T08:05:38","modified_gmt":"2020-01-29T06:05:38","slug":"alcohol-cigarette-and-payroll-taxes-heres-what-could-fund-the-nhi","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/368884\/alcohol-cigarette-and-payroll-taxes-heres-what-could-fund-the-nhi\/","title":{"rendered":"Alcohol, cigarette, and payroll taxes – here’s what could fund the NHI"},"content":{"rendered":"

South Africa is expected to spend significantly more on healthcare in the coming decade as the country prepares for the introduction of the National Health Insurance (NHI).<\/p>\n

Writing in the latest South African Health Review journal, <\/a><\/strong>analysts – including Treasury, World Bank, and legal officials – state that this fund-raising will include a combination of increased government spend and taxes.<\/p>\n

They add that this could include the possible earmarking of existing ‘sin taxes’, with cigarettes and alcohol some of the primary contributors to the chronic diseases impacting South Africans.<\/p>\n

“Given that chronic diseases have become the largest national burden of disease, consideration may also be given to increasing excise taxes on unhealthy goods (\u2018sin-taxes\u2019), such as alcohol, tobacco and the recently introduced sugary beverage tax.<\/p>\n

“Although a hard earmarking of this revenue is unlikely to be implemented, some international experience shows that public support for such taxes is stronger when a portion of the revenue is allocated to health interventions,” the analysts said.<\/p>\n

The pros of sin-taxes include reduced consumption of harmful substances, whereas cons include that they often do not raise large enough sums of revenue.<\/p>\n

Other long-term options\u00a0<\/strong><\/p>\n

The analysts believe that other longer-term options might include ultimately raising the tax-to-GDP ratio above 26% of GDP on the main budget or introducing new mandatory social security contributions.<\/p>\n

Although the tax-to-GDP ratio in South Africa is already slightly above the average for upper-middle-income countries, it falls below that of high-income countries, and South Africa has a relatively poorly developed mandatory contributory social security system.<\/p>\n

“Gradual introduction of a payroll tax may (also) be palatable if it accompanies improved quality and benefits, while the private sector fails to contain costs and therefore loses members.<\/p>\n

“Such a tax can be a part of total revenue and need not be ring-fenced for health.”<\/p>\n

The NHI White Paper projects that public health financing would increase from around 4% of gross domestic product (GDP) to 6.2% of GDP by 2025\/26.<\/p>\n

Although this will require additional funding, total health expenditure may not grow to the same extent as a result of beneficiaries voluntarily leaving medical schemes and instead using publicly funded services as the NHI matures.<\/p>\n

As a result, the White Paper estimates a funding shortfall of R72 billion for NHI by 2025\/26, based on an assumption of 3.5% annual economic growth.<\/p>\n

\n

Read: Taxes \u2013 not \u2018extra money out of your pocket\u2019 \u2013 will fund the NHI: government<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa is expected to spend significantly more on healthcare in the coming decade as the country prepares for the introduction of the National Health Insurance (NHI).<\/p>\n","protected":false},"author":10,"featured_media":153123,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26],"class_list":["post-368884","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/368884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=368884"}],"version-history":[{"count":10,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/368884\/revisions"}],"predecessor-version":[{"id":368928,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/368884\/revisions\/368928"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/153123"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=368884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=368884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=368884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}