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How taxpayers will cough up for the new NHI

There is no doubt they will find the additional tax burden a bitter pill to swallow.

The new National Health Insurance (NHI) Bill, tabled in parliament on Thursday, sheds some light on the establishment of the controversial new NHI Fund. 

The memorandum on the objects of the bill explains that the reforms will be implemented in six phases, more details of which will be released in a series of implementation plans to be released by the Department of Health.

The main question for medical aid members and other taxpayers is whether they can still belong to medical aids and, if so, whether they will be forced to pay not only their medical aid contributions, but to also contribute towards the NHI.

The answer to both questions is ‘yes’, although the details have not yet been released.

The NHI will be funded by way of:

  • General tax revenue, which will include transferring funds from provincial health budgets to the NHI Fund;
  • Taxpayers’ medical scheme fees tax credit will be reallocated to the NHI Fund;
  • A payroll tax (employer and employee); and
  • A surcharge on personal income tax.

There is as yet no indication as to how much this will cost taxpayers. The taxes will be imposed by a money bill to be introduced by the minister of finance.

According to the memorandum, these tax options will only be evaluated as part of the sixth and final stage of implementation, which will presumably not be before 2022.

Interestingly, the memorandum refers to the evaluation of the new tax options “in a favourable economic environment”. 

It also envisages that the payroll tax will be ‘small’ although there is no indication as to what this means.

In the part of the memorandum dealing with the financial implications for the state, it refers to the various financing options, and then states that “due to the current fiscal conditions, tax increases may come at a later stage of NHI implications”.

It thus appears that further taxes will only be imposed at a later stage after evaluation of the potential impact thereof, taking into account the economic and fiscal environment.

What seems more certain is that taxpayers will no longer receive medical scheme fees tax credits, which for a family of four currently provides relief of just more than R12 000 per year.

There is no doubt that taxpayers will find the additional tax burden a bitter pill to swallow.

Aneria Bouwer is a tax partner at Bowmans.

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COMMENTS   34

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I don’t believe that the people who can’t manage to manage our SOE’s would ever be able to manage the NHI.

I recommend using the PIC money for NHI and Eskom.

This is a terrible idea because the GEPF is a defined benefit scheme. Shortfalls are guaranteed by the state, which means the taxpayer.

We are halfway there anyway.

Since the ANC has ruled out IMF intervention you can bet that their “economic recovery plan” will require prescribed assets.

Essentially pensions will be used to pay the salaries of state and SOE employees.

As this strategy is not sustainable the state will have to print money to pay pensions, salaries and social grants.

I agree. Besides using PIC funds, also the entire Treasury/SA national reserves to be consumed. (It will be potential great news for all rand-hedges)

Not a question of belief. It can be taken as fact. They will not be able to manage it in the same manner as they do not manage SOEs successfully. Very depressing sliding slowly into the abyss of economic destruction.

With staggering incompetence shown in all endeavors so far the doggedly pursue the road to another disaster of epic proportions.

They cannot even manage the state hospitals they were gifted in 1994 – how the heck will they manage this?????

Too true – the issue that doesn’t seem to be mentioned is demand management. If something is free at the point of delivery demand will be totally inelastic. However the key issue is that as we have no effective border control this demand will come from the whole of Southern Africa. How will medical tourism be managed, will patients produce an NHI card? Now there’s a nice little earner for fraudsters. The stupidity of this move for a country at SA’s stage of development goes on and on as we have leaders incapable of assessing the consequences of any of their actions beyond the time it takes to effect a media sound bite.

It’s amazing to me that anybody can express nostalgic sentiments about the grossly unequal health system in South Africa before, and at, the transition to democracy in 1994. There is no defending a two-tier system based purely on race: I thought we had all moved on from this but clearly not!

It’s equally bizarre to read lots of divisive comments about how “we” (presumably, white people) gifted “them” (presumably, black people) working hospitals in 1994 and how “they” and “their people” are destroying everything. Although there’s no denying that the ANC is a hopelessly corrupt kleptocracy, nobody gifted anybody anything in 1994 and the country in April 1994 wasn’t the land of health, milk and honey some people seem to think it was.

It’s stating the obvious that the NHI scheme, like anything run by the ANC is bound to fail – and it’s extraordinary that the government presses on, regardless of all the warning signs, like some Soviet apparatchiks buoyed solely by ideology that has failed and impoverished people everywhere it has been tried. Our various health ministers display the typically profound economic illiteracy of the ANC by repeating on and on that the 4% of GDP spent in the private sector needs to be spread around, without realising that people are unwillingly spending that 4% out of their post-tax income because they cannot rely on the state to deliver basic services paid for by their taxation.

It’s also a complete distraction to say “we need a national healthcare system”. Newsflash to the ANC: we already have one. It just doesn’t work. And pouring more money, to the limited extent it isn’t looted on the way, into a leaking vessel won’t help. It’s a smokescreen for the ANC’s failure to deliver a working system. Worryingly, it is also not in the ANC’s interests to have a well-educated and healthy electorate – as in Zimbabwe, rising education and socio-economic mobility cause the scales to fall from people’s eyes and they turn away from corrupt “liberation” parties.

Make no mistake: if the NHI scheme is implemented, people will suffer and die, particularly the poor. Those who can, especially medical staff, will have to emigrate – even if they really do not want to. The UK is already loosening their skilled visa caps to lure foreign science specialists to the country and our highly-experienced doctors with fluent English will desert us in their droves. Canada and Australia do likewise.

But…if this argument descends into a rant about how “they” are destroying “our” country, nobody will get anywhere. And it only adds grist to the divisive mill of the warped narrative that NHI is needed to root out white privilege in healthcare.

The few tax payers must fund Escom , SABC, SAA , Social Grants and now NHI ?
The consideration for current and future tax payers to leave South Africa are becomiing clearer every day.
For those who cannot emigrate ( pensioners , middle class ).. we foresee an extreme decline in private medical aid contributions with dire consequences on JSE and employment.

A merger with Zim is as clear as mud !

As with EWC and bullet trains, NHI unlikely to start anytime soon.

There simply aren’t any skilled cadres who know how to execute. In Africa, we’re good at gatherings and discussions. That’s our strong-suit.

Interesting you should say that. In fact some years ago a team was setup to look into nationalising mines. I love how they came back and said their research was inconclusive as it worked it some countries and failed in others but no case could fit into what South Africa needed. They’ve looked into such in other countries and we know that in those few it works, it won’t work here because we are unique (read corrupt).

They managed to kill +-150 in Gauteng recently, imagine how many will die now.

Adrian Gore where are you now? come talk sense into these morons.

More funds to loot. They can’t manage NSFAS, how to manage this. First month hospital workers will be on strike, toy, toying with our lives. NHI good in principle but not with thugs running it.

“The state is that great fiction by which everyone tries to live at the expense of everyone else.” – Frederic Bastiat (1801-1850)

Will follow same route as SANRAL etoll – another project where billions of taxpayers money will wasted. Rather build houses and create jobs for the people with this money so they afford their own medical expenses.

And train teachers who are able to teach effectively in many more schools, colleges, and skills training centres. “Teach a man how to fish” principle. But commie socialists will never understand with heads wallowing in the trough.

Life Esidimeni x 1,000,000?

Yours is the best case scenario.

More likely we will “transform” into the hog farm of Thandi Modise (speaker of parliament of the Republic of South Africa).

I Believe just removing free ARV’s and TB drugs has the potential to decrease the current population by 25 million in 12 months.

and even with one of the corrupt individuals on TV admitting that she took grants 6 months after the death of a patient nobody is in jail..ANC must believe that taking money from people while working for the state is how things work…therefor nothing will happen after the Zondo commission

It will come from government employees pension monies because when it is your money you are more likely to use responsibly but with this useless bunch that may not even be enough.

There will be a spike in the affluent leaving South Africa in the next five years, leaving a way-too-small number of people to fund this crazy scheme. Unless the IMF stops the madness when they take over our country next year (or will it happen before Christmas still?).

The ANC needs another cash cow to milk – hallo NHI.

Will end up like everything else they touched, this time with dead bodies to show.

short version of my deleted comment..in the 80’s we provided services to hospitals in the Katlehong area…it was clean and well managed with good doctors (all races). Why did these top hospitals fall apart after 1994?…and is it an example of what will happen after NHI

So how will my doctor operate? I pay 100% in full and pray that NHI reimburses me 20% of the cost?

Does my doctor emigrate and then I have stand in line at the government clinic.

“Medical schemes tax credits to be reallocated…”

THERE GOES the only tax relief that (especially) pensioners relied upon!! 🙁

(Well, then there’s no worry about the medical schemes act’s current Late Joiner Penalty regime above 35-age….there will by 20106 be no need to belong to such a private scheme(?)

apologies, typo “2026”

The best practical solution to future medical care in SA, is to emigrate to the same country that your doctor has gone (or will soon go).

Whats happening in SA, is that the disasterously run state hospital system is basically using the (still successful) private healthcare system carry more and more of the burden, by sucking it dry.

Discovery Holdings is a long-term share sell.

After 2026 the NHI will be on a drip & on life support. SA’s current 60mil inhabitants may reduce to around 10mil. (and productive agriculture land will also lay bare). A possible investment opportunity may arise, i.e. to invest in spade-manufacturing (as there will be a lot of grave-digging).

What about taxpayers uniting for Hong Kong style rolling protests? Get the basics right – which has proved impossible till’ now – then we’ll review NHI.

So the more responsibilities the government take on, the greater their need for funding. With the tax base decreasing at a steady pace, what will follow can only be quantitative easing.

Print money to stay in power, to appease the appeaseless masses; this wreck is heading for impact soon…

The government is unable to organise a piss-up in a brewery, yet they seem toxbe taken aback that we do not trust them with our health care?

Lots of Saffa doctors here in Canada already. I’m sure a lot more of them will follow. Especially specialist.And even doctors close to retirement, who could still earn sone real currency for the last years before retiring.

This NHI is a pipe dream – first estimated are of the order of R 356 billion. This government can’t even raise funds sufficient funds to feed the furnaces of Eskom, SAA, Denel and a host of other SoE’s. The tax base is shrinking and yet they propose recovering from the few taxpayers to pay for the non tax payers and the gimme’s. As a pensioner why must I stump up tax funds for an out of control government and a state that encourages breeding, and has open borders to all African countries – we are not a welfare state

Here’s the basket of cover we can expect to look forward to:
4 x Sangoma visits (there will be no Doctors left)
2 x Throwing the bones sessions per year (all scanning equipment will be broken or stolen)
6 x Beetroot juices per year to cure aids, TB and several other diseases
2 x garlic cloves per month to make you impervious to bullets, stab wounds, black magic & WMC

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