South Africa

Concerns over tax hikes to fund the NHI

There are concerns about the National Treasury’s intention to levy additional taxes on South Africans to fund the National Health Insurance (NHI).

President Cyril Ramaphosa said during his 2024 State of the Nation Address that he will sign the National Health Insurance (NHI) Bill into law soon.

“While our health system has had a great impact on people’s lives, we are working to improve both the quality of healthcare and equality of access,” Ramaphosa said.

“We plan to incrementally implement the NHI, dealing with issues like health system financing, the health workforce, medical products, vaccines and technologies, and health information systems.”

Ramaphosa’s words came despite threats of legal challenges from organised business over concerns about its constitutionality.

Business Unity South Africa (BUSA) and Business for South Africa (B4SA) called on the President to refer the Bill back to Parliament for amendment.

BUSA and B4SA have threatened legal action against the government over the NHI should it become law in its current form.

Martin Kingston, B4SA Steering Committee Chair, said their concerns, recommendations, research, data, and inputs have been ignored.

“No amendments were made at all, including those suggested by the Department of Health itself, which is deeply concerning for our country and democracy,” Kingston said.

Wits School of Governance Professor Alex van den Heever also slated the NHI Bill, saying there is no rational reason to implement it in South Africa.

He warned that it threatens both the public and private healthcare systems and will disrupt healthcare provision in South Africa with potentially devastating consequences.

Van den Heever also cautioned against consolidating power in one entity, which would result in R600 billion being under the control of the Health Minister. “That is just wrong,” he said.

“It is the design that has collapsed pretty much everything that we have in the state at the moment,” he added.

Concerns about increased taxes

Dr Dion George, DA MP

Numerous organisations have warned that funding the NHI will require a big tax increase for South African workers.

NHI Deputy Director General Nicholas Crisp said the only way to move medical aid money into the NHI fund is through taxes.

“Whether that is through VAT or other taxes is a matter for the National Treasury and the money bill, which will come later,” he said.

FTI Consulting said the NHI Bill would require over R200 billion in funding, in addition to the Department of Health’s annual budget.

The NHI’s funding translates into an additional tax of R1,565 per month for every worker in South Africa.

The DA slated the National Treasury’s intention to levy additional taxes on South Africans to fund the National Health Insurance (NHI).

“The projected financial impacts of the NHI are alarming, and estimates have reached as high as R859 billion per annum,” the DA’s Dion George said.

Since the introduction of the NHI Bill, the government has remained elusive about how it will be funded.

“The Treasury has now indicated plans to hike taxes, by an undetermined amount, to finance the NHI,” George said.

The DA said the South African economy is already beset by one of the most onerous tax regimes in the world.

“Any tax increase will be unduly burdensome, highly regressive, and disproportionately impact lower-income households,” he said.

“We remain committed to the principle of universal access to healthcare for all citizens.”

“However, the NHI Bill is unconstitutional and will only serve to further erode an already ailing national public health sector.”

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