{"id":711916,"date":"2023-08-18T13:00:00","date_gmt":"2023-08-18T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=711916"},"modified":"2023-08-18T12:39:20","modified_gmt":"2023-08-18T10:39:20","slug":"the-absurd-tax-changes-south-africa-would-have-to-make-to-afford-the-nhi","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/711916\/the-absurd-tax-changes-south-africa-would-have-to-make-to-afford-the-nhi\/","title":{"rendered":"The absurd tax changes South Africa would have to make to afford the NHI"},"content":{"rendered":"\n

Recent data shows how illogical the government’s plan to implement universal healthcare in South Africa is when considering the country’s financial situation and how they expect to fund the National Healthcare Insurance (NHI) Bill.<\/p>\n\n\n\n

The National Assembly passed the NHI Bill in June 2023, bringing the laws that will lay the foundation for the government\u2019s ambitious promise of free healthcare one step closer to reality.<\/p>\n\n\n\n

The bill still has to make its way through the National Council of Provinces before being sent to the president to be signed into law.<\/p>\n\n\n\n

Health minister Joe Phaahla noted that \u201cthe people of South Africa would have access to the same clinic or hospital \u2013 either public or private \u2013 closer to where they live or work without paying \u2013 the government will pay.\u201d <\/p>\n\n\n\n

Phaahla made it clear that one way or another, taxpayers will be footing the bill.<\/strong> “All of us will contribute to this fund through taxes and special contributions in line with what we can afford,” he added.<\/p>\n\n\n\n

Of course, when the minister says that the government will pay, he means that taxpayers will pay \u2013 and one of the biggest questions hanging over the controversial scheme is how exactly this will be done.<\/p>\n\n\n\n

According to a report<\/strong><\/a> by the Solidarity Research Institute (SRI), South Africa’s National Health Insurance (NHI) plan requires an additional R295.93 billion, which the country’s strained budget and taxpayers cannot afford.<\/p>\n\n\n\n

South Africa currently has a budget deficit of 4.2%. However, the report noted that HSBC believes it will be 5.1%, and Moody\u2019s predicts a 5.6% deficit due to lower-than-expected tax revenue and a higher-than-expected salary adjustment for public servants.<\/p>\n\n\n\n

In 2023, debt servicing costs will consume R340.5 billion of the national budget, which is over 17% of state revenue.<\/p>\n\n\n\n

The report stated that middle-income countries like South Africa typically spend around 6% of their GDP on healthcare, including both state and private sector spending. In 2020, South Africa spent approximately 8.6% of its GDP on healthcare. <\/p>\n\n\n\n

\u201cThe state usually budgets between 4% and 5% of GDP for health. For 2023, the proportion is a meagre 3.9%,\u201d the SRI said. \u201cThis indicates a budget that is under severe pressure.\u201d<\/p>\n\n\n

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Absurd tax implications <\/strong><\/p>\n\n\n\n

The report states that if NHI were to be implemented today, there would be a budget deficit of R181.95 billion. <\/p>\n\n\n\n

\u201cThe fact of a decrease from 2022\u2019s assumed figure actually underlines the unaffordability of the NHI because it stems from the failure of the Treasury to properly adjust the health budget this year.\u201d <\/p>\n\n\n\n

\u201cLooking at 2026 \u2013 the year in which the NHI is supposed to be implemented \u2013 an enormous extra R295.93 billion will be required in order to balance the books.\u201d This means healthcare would be the biggest item in the South African budget by far, at a total cost of R659.35 billion<\/strong>.<\/p>\n\n\n\n

\u201cThis is unheard of for a middle-income country, where spending on education usually enjoys the highest priority. While more affluent countries spend more on healthcare, social grants usually receive the highest priority, never health,\u201d said the SRI. <\/p>\n\n\n\n

The report found that R295.93 billion could theoretically be generated by abolishing the medical tax credit (about R30 billion) and<\/strong> levying the following taxes:<\/strong> <\/p>\n\n\n\n