The tax increases the state needs to finance National Health Insurance are unrealistic, says organised business, warning that to raise an extra R200bn in tax revenue would mean boosting personal income tax by almost one-third, VAT from 15% to 21% or applying a payroll tax 10 times higher than the current UIF contribution – or a combination of the three.
Business Unity SA (Busa) and Business for SA (B4SA) said in a joint statement that this was “obviously unworkable as SA taxpayers are already under extreme financial pressure and any increases are bound to impact them materially”.
Busa represents organised business interests, while B4SA is an alliance of business leaders that works with the government on problems confronting SA. The tax impact analysis was provided by FTI Consulting.
Organised business said it supported the concept of universal health coverage, as healthy populations are more productive and could participate more meaningfully in the economy, but it did not support the single purchaser model set out in the Bill, reports Business Day.
Risk
“The NHI Bill’s single funder model, where government is the only source of funding and procurement for all health services, poses a significant risk to the economy. It introduces serious systemic risks associated with governance, the country’s ability to attract and retain skills and investment, the removal of competition in buying health services and the feasibility of raising taxes,” the statement said.
“It is imperative we get the NHI model right before it is adopted into law as there are severe ramifications and unintended consequences for passing and subsequently implementing legislation that is not fit for purpose.”
Previously, Busa had pleaded that medical schemes be allowed continue under NHI, saying this would keep the private sector viable and reduce the load on public health facilities.
It also proposed that section 33 of the Bill be amended to allow a multi-purchaser model.
B4SA chair Martin Kingston said there was still scope for this aspect to be amended by the National Council of Provinces.
Economic circumstances have worsened significantly since the Bill was drafted, he added, noting that the Treasury was expected to signal further budget cuts in October.
Business can play a powerful role in tackling some of SA’s most pressing problems, with the private sector having immense resources and capabilities that could be tapped into to improve the delivery of healthcare – but not in the manner proposed in the NHI Bill, Kingston said.
BusinessLIVE article – Business groups drop NHI tax bombshell (Restricted access)
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Government dodges issue of NHI funding model – DA
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NHI — a funding model masquerading as a delivery system