“VAT will effectively have to be doubled,” says Solidarity. The Solidarity Research Institute has released a report detailing the enormous amount of funding necessary to effectively implement the National Health Insurance (NHI) scheme.
The numbers far exceed those previously calculated by the Health Minister, Aaron Motsoaledi. What’s more worrying is the heavy impact this will have on South African taxpayers.
According to Solidarity researcher, Morné Malan, funding required by the NHI is closer to R357 billion with a deficit of approximately R210 billion.
NHI: How does it affect the taxpayer?
Malan outlined the exorbitant fees which would need to be carried by the South African taxpayer. According to his research, value-added tax (VAT) would effectively double in order to carry the weight of NHI.
Commenting on the burden taxpayers will be forced to carry, Malan said:
“It is very difficult to determine from where the additional money to fund the NHI will come. It will take as much as 70% of personal income tax, or even as much as 99% of the income through value-added tax (VAT) to provide for the deficit. VAT will effectively have to be doubled.”
Motsoaledi admits that he has no idea how much the NHI program will cost. Initially, the health minister threw out a thumb-suck figure of R259 billion. He blamed this irregularity on poor estimations calculated by an external accounting firm.
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Both the World Bank and the World Health Organisation have agreed that the exact cost of a nationalised health system cannot accurately be quantified.
How much is a nationalised health system going to cost?
Motsoaledi firmly believes that introducing the national healthcare reform is a step in the right direction in the fight against South Africa’s social and economic inequality. The minister has remarked:
“You cannot balance books against service delivery on human life.”
Malan argues that the proposed system will almost certainly cost much more than what the government’s initial estimates indicate. Commenting on the speculative costs of NHI, the researcher said:
“What is even more worrying, is that the number for NHI funding is rather closer to R357 billion with a deficit of approximately R210 billion. It is simply madness to assume that this deficit can be eradicated by taxes.”
Malan added that while in theory, a free healthcare system has its merits, there is simply not enough money in the country to implement the scheme effectively.
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