[South Africa] Funding the NHI would take monthly R1,500 payroll tax from every worker

In South Africa, research into the affordability of the National Health Insurance (the NHI) shows that it would cost every formally employed individual R1,500 a month through a payroll tax to meet the Department of Health’s funding estimations. Alternatively, it could demand a massive 22 per cent VAT or 30 per cent-plus income tax rise, Business Tech reports.

During the wait for President Cyril Ramaphosa to sign the National Health Insurance (NHI) Bill into law, finance experts have again warned that the scheme – in its current form – is not economically viable and needs huge sources of funding to make it a reality.

Financial experts at FTI Consulting reportedly highlighted findings from their 2023 NHI Funding - Macro Implications report, as South Africa headed into budget week. The report explores the various funding mechanisms required to get the universal healthcare plan off the ground.

“While everybody agrees that the country’s healthcare system requires reform and that this should provide access to universal health coverage, the NHI Bill, in its current form, is not economically viable for South Africa,” FTI Consulting said.

“The Department of Health, in its 2017 White Paper on the NHI and the NHI Bill, has flagged sources such as VAT, personal income tax and payroll taxes for raising additional funding – and in a presentation it made in December 2022, said that it would need to raise an additional R200 billion per year to fund the NHI.”

The R200 billion is an older and conservative estimate. FTI reportedly stated that any funding would have to be sourced from taxes. According to prior reporting from Business Tech, the government has already confirmed that taxpayers will be paying for the scheme.

But any tax changes would require the National Treasury to propose a Money Bill, FTI said. It added that the passage of the NHI Bill, and even its signing into law, does not alter any taxes.

As a result, eyes will be on the National Treasury to see if any indications of funding mechanisms in the near term arise.

Economists are reportedly divided on the issue with many saying the Treasury is likely to skip it for now. However, some believe that, in an election year, it could be too ‘exciting’ a voter prospect to be entirely ignored, with tax credits potentially on the line.

Source: Business Tech

(Link and quotes via original reporting)

In South Africa, research into the affordability of the National Health Insurance (the NHI) shows that it would cost every formally employed individual R1,500 a month through a payroll tax to meet the Department of Health’s funding estimations. Alternatively, it could demand a massive 22 per cent VAT or 30 per cent-plus income tax rise, Business Tech reports.

During the wait for President Cyril Ramaphosa to sign the National Health Insurance (NHI) Bill into law, finance experts have again warned that the scheme – in its current form – is not economically viable and needs huge sources of funding to make it a reality.

Financial experts at FTI Consulting reportedly highlighted findings from their 2023 NHI Funding - Macro Implications report, as South Africa headed into budget week. The report explores the various funding mechanisms required to get the universal healthcare plan off the ground.

“While everybody agrees that the country’s healthcare system requires reform and that this should provide access to universal health coverage, the NHI Bill, in its current form, is not economically viable for South Africa,” FTI Consulting said.

“The Department of Health, in its 2017 White Paper on the NHI and the NHI Bill, has flagged sources such as VAT, personal income tax and payroll taxes for raising additional funding – and in a presentation it made in December 2022, said that it would need to raise an additional R200 billion per year to fund the NHI.”

The R200 billion is an older and conservative estimate. FTI reportedly stated that any funding would have to be sourced from taxes. According to prior reporting from Business Tech, the government has already confirmed that taxpayers will be paying for the scheme.

But any tax changes would require the National Treasury to propose a Money Bill, FTI said. It added that the passage of the NHI Bill, and even its signing into law, does not alter any taxes.

As a result, eyes will be on the National Treasury to see if any indications of funding mechanisms in the near term arise.

Economists are reportedly divided on the issue with many saying the Treasury is likely to skip it for now. However, some believe that, in an election year, it could be too ‘exciting’ a voter prospect to be entirely ignored, with tax credits potentially on the line.

Source: Business Tech

(Link and quotes via original reporting)