The introduction of the National Health Insurance (NHI) Bill has been a controversial topic of conversation among all South Africans who have access to medical aid. A new plan to make the implementation of the Bill a reality may mean government plans to increase both spending and taxes to raise enough funds.
The latest South African Health Review Journal stipulates that this may include increasing sin tax, as cigarettes and alcohol are among the primary contributors towards chronic diseases that impact South Africa.
“Given that chronic diseases have become the largest national burden of disease, consideration may also be given to increasing excise taxes on unhealthy goods (‘sin-taxes’), such as alcohol, tobacco and the recently introduced sugary beverage tax,” the Journal reads. “Although a hard earmarking of this revenue is unlikely to be implemented, some international experience shows that public support for such taxes is stronger when a portion of the revenue is allocated to health interventions.”
The Journal stipulates that the pros of increasing sin tax include the reduced consumption of harmful substances that often cause chronic disease in South Africa. The cons include that sin tax often does not generate large enough sums of revenue.
The government and National Treasury analysts believe that other long-term options may include heightening the tax-to-GDP ratio to above 26% on the main budget or implementing the introduction of new mandatory social security contributions.
“Gradual introduction of a payroll tax may (also) be palatable if it accompanies improved quality and benefits, while the private sector fails to contain costs and therefore loses members,” the Journal reads. “Such a tax can be a part of total revenue and need not be ring-fenced for health.”
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