Recent government proposals of a 0.5% rise in VAT as a way to support the National Health Insurance (NHI) Fund have added to concerns from the medical profession and civil society, who suggest alternatives like targeted health levies, closing tax loopholes, and improving efficiency in existing public healthcare expenditure.
Dr Mvuyisi Mzukwa, chairperson of the SA Medical Association (SAMA), said while SAMA supports the objective of achieving universal health coverage, “we must be unequivocal in our assessment: relying heavily on VAT to finance NHI is both economically regressive and socially unjust”.
“VAT is an inherently blunt instrument. It applies equally to all consumers, regardless of income level, disproportionately affecting lower-income households who already spend a larger share of their income on basic goods and services.”
Increasing VAT to fund the NHI risked deepening inequality, the very issue the NHI purported to address, he told The Star.
“SAMA urges the government to adopt a more progressive and diversified approach to funding universal health coverage,” he said.
“There are various options available…. And fostering economic growth to broaden the tax base must be prioritised.”
Dr Avashri Harrichandparsad, public health medicine specialist from UKZN, said there were broader concerns around healthcare quality and efficiency in both the public and private sectors that must be tackled concurrently.
“Whatever decisions the National Treasury make will take into account the fiscal and economic environment and will have to first be approved by the Cabinet,” he said.
“Given the current challenges in both the public and the private healthcare sector, it is natural to have reservations about the proposed changes. Transparency and accountability in the design and implementation are paramount.”
Dr Cedric Sihlangu, general secretary of the South African Medical Association Trade Union (Samatu), said funding the NHI required careful consideration, and that successful implementation of the Fund would require “a number of infrastructural developments at most of the public healthcare facilities”.
“Increasing VAT could be one potential avenue …however, this approach also presents challenges, particularly concerning its regressive nature,” he said.
“An increase in VAT may affect lower-income households, potentially leading to increased financial strain on vulnerable communities.”
Sihlangu said it would be pointless to strive for equity in healthcare access while diminishing people’s quality of life.
“The increase in VAT cannot be the only solution to generate funding for the NHI. It is essential for policymakers to engage in comprehensive consultations with all stakeholders.”
The government recently published proposed governance regulations for the NHI Fund for public comment. The deadline for comments is 6 June 2025.
The Star PressReader article – Concerns over VAT increase to fund NHI (Open access)
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