Budget: No new taxes to fund vaccines but medium-term Health funds slashed

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Government estimates that total funding for COVID-19 vaccines could come to R19.3bn, and it is prepared to fund this through the budget and – if necessary – withdrawals from the contingency reserve and emergency allocations, Fin24 reports National Treasury highlighted in the 2021/22 budget review.

However,Treasury has instituted a R67.2bn cut to consolidated health expenditure over the medium-term expenditure framework, deepening the R3.9bn cut that had already been worked into the 2020 budget, writes BusinessLIVE.

Finance Minister Tito Mboweni tabled the national budget in Parliament on Wednesday. During his speech he addressed concerns on where funding for COVID-19 vaccines may come from.

Treasury director general Dondo Mogajane had previously said that a number of options were being considered, such as tax revenues, further borrowing, reprioritisation of expenditure or withdrawals from the National Revenue Fund.

Fin24 reports that the vaccine rollout will be free for the majority of citizens, and private providers will be able to claim back the cost from medical aid schemes, according to a Treasury official. And government will not be introducing a special COVID-19 tax, as tax experts had previously highlighted as an option.

"Funding for vaccine procurement and rollout is drawn from the national budget. Since the state is procuring vaccines on behalf of both the public and private sectors, some revenue will return to the fiscus when private providers buy vaccines from the state," Treasury said in its budget review.

Treasury said that the rollout of COVID-19 vaccines is a priority to save lives and support the reopening of the economy. Government aims to have 67% of the population, or 40m people, vaccinated by the end of the year.

Apart from the main budget, allocations are also made through the "COVID-19 component" of the HIV, tuberculosis, malaria and community outreach grant – which was introduced in the June 2020 special adjustments budget.

 

Full Fin24 report (Open access)

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