Gordhan: NHI won't increase tax burden

Gordhan: NHI won't increase tax burden

2011-08-11 12:42

Pretoria - South Africa will fund a proposed National Health Insurance (NHI) programme through the fiscus, employers’ contributions and other funding mechanisms, and the government does not want the plan to increase the burden on taxpayers, Finance Minister Pravin Gordhan said on Thursday.
A government source citing a policy paper to be released on Friday said earlier that the NHI, which is aimed at giving greater access to healthcare for the country’s poor, will require R125bn in 2012, R214bn by 2020 and R255bn by 2025.

If the NHI is implemented, it will be one of the biggest changes brought in by the ANC since it came to power in 1994.

Gordhan said the government did not want to increase the burden on taxpayers with the introduction of the NHI and the programme will be funded through the public finances, contributions from employers, surcharges and partnerships with the private sector.

“There is money in the systems and there may be extra money required,” Gordhan said.

The government has previously said it was investigating how the NHI would be funded and among the options were surcharges on taxable income and VAT increases. Analysts expect the main source of revenue to come from general taxation.

But Gordhan said: “We don’t want to burden anybody more than they need to under normal taxation."

“The goal is to try and finance healthcare for everybody,” Health Minister Aaron Motsoaledi told reporters at a briefing.

Motsoaledi said that proposed system will not be able to mirror South Africa’s advanced private healthcare sector but would give millions of poor people better access to healthcare.

“NHI is not intended to destroy the private healthcare sector. (It) is one meaningful way to reach across the wealth gap. We all need decent healthcare.” he said.

South Africa is spending about 8.5% of gross domestic product on public healthcare, but the standard of service is poor. Giving the majority access to world class private facilities aims to improve quality of health treatment.

Contributors to private healthcare schemes are concerned that the NHI would force them to seek treatment at poorly run and overcrowded state facilities.

The policy will be published in the official government newspaper on Friday, kicking off a three-month consultation process.

Health industry officials said many private healthcare providers were not opposed to the NHI.

“Private healthcare professionals are not opposed to the NHI because it will bring more business to them, but they want to see what the paper sets out,” said Dr Norman Mabasa, president of the South African Medical Association.

“We want to see what government plans to include on the NHI and how it will be implemented. We don’t expect the free system to cover everything that private medical offers.”

  • HowardX - 2011-08-11 12:50

    Is this man stupid, or does he assume we are? Because it will come out of "employers contributions" and not income tax somehow means that there will be no taxpayer burden. And what does he mean by "there is money in the systems"? This is going to be a waste of monumental proportions. Any doctor will tell you that the primary problem is not money, it's management. You can throw billions at hospitals but if they are run by unqualified morons (aka "deployed cadres") who do not pay their suppliers, fail to process salaries or recruit properly, and couldn't be bothered to invest in new equipment despite having budget, NO amount of money is going to make a difference.

  • The_Realist - 2011-08-11 13:01

    how about scrapping this & EASING the tax burden?!?!

  • Goose - 2011-08-11 13:04

    Are Aaron Motsoaledi and Pravin stupid? Without raising taxes on the middle class, there is no way the ANC can finance the NHI! Also, if the ANC have totally stuffed up the government hospitals, how the hell are these morons going to implement this colossal money swiper? The complete ineptitude of these politicians is quite staggering!

  • one-way - 2011-08-11 13:05

    Yep, you know you`ll be pushing your luck taxing the tax-payer, because you`re only one more unfair tax away from serious opposition and big job losses. When you`ve fixed government hospitals, make them efficient, you will discover the NHI is not necessary. Then again I suppose it`s easier to let the private sector do your work for you.

  • Nzx - 2011-08-11 13:10

    Anyone who think that NHI is not good, should undrgo an urgent brainscan. The crook in white coat, SA private hospital, will demand huge cash for a scan. As for the funding, if not taxation of the rich, surely not the poor, then left w bllod out of stone. Why not just call it ANC blood out of stone transfusion service.....eish, all in one day in Africa

      Tolerant - 2011-08-11 14:58

      Another place where money will be stolen from. People will flock to private doctors that get NHI contracts. Some state facilities don't even have Panado's.

  • Jack McRip - 2011-08-11 13:11

    Surcharg is an additional charge on what? I recon tax even though the minister is covering his but. The Reallity is that the already overtaxed middleclass (Traditionaly not ANC Supporters) will be footing the bill which the ANC needs to pass enorder to keep their voters. This is the ANC buying votes with my money! And I should be happy about this. The Reaching over the gap. Please reach over the gap between your ears.

  • Spyker May - 2011-08-11 13:11

    I am sorry - I simply do NOT believe it...

  • Sambulo27 - 2011-08-11 13:14

    this is indeed a great initiative by the government, but i forsee a situation where the ANC haters will ill-talk this plan. if implemented correctly it will help the poor get better health care.

      Afro-nut - 2011-08-11 15:16

      Yes Sambulo27, that is the crux, "if implemented correctly". Sadly, their track record shows that the chances of that happening are slim and none, and slim has just left town.

      Leon Haywood - 2011-08-11 16:03

      @Sambulo. Please give any any example of anything that this government and the previous one has done correctly. ANYTHING? Fifa 2010? The stadiums are bankrupt. I'm talking with regards to Police, Health, schools etc. ANYTHING. OPEN YOUR EYES and educate your people. The ANC is only in this for the money.

  • thetruth - 2011-08-11 13:15


  • corne.brink - 2011-08-11 13:15

    As a medical professional I still feel too much of "health care" funds are spent on victims of trauma & violence - I will rather see the money spent on a safer HIV free country, and automatically there will be more funds for the real sick people!

  • Goebels - 2011-08-11 13:23

    Someone will pay, minister. If it is business, employees will pay with lower increases. I'm all for better health care, just would feel a lot more confident if your colleagues weren't wasting billions.

  • Ann - 2011-08-11 13:30

    I'm no financial boffin, but any more money off my salary just means less in the long run and when we look at the atrocious state of current health facilities, this worries me. Particularly when these facilities neglect to pay suppliers for medication and equipment. I would imagine, "There, but for God go I", will become a motto that will be uttered by many a South African.

  • PilgrimX - 2011-08-11 13:31

    "NHI won't increase tax burden" Minister Gordhan, I really did not expect you to utter such a shallow promise, or recless statement. Are you perhaps addressing the illiterate masses?

  • v3 - 2011-08-11 13:32

    Godhan is a liar. Calling a tax "contributions from employers" , "surcharges" and other euphemisms doesn't change their essential nature from being a tax imposed by the government of the day. The ANC loves word games, substituting form over substance, renaming streets and institutions instead of maintaining them and deceit over delivery. Talking of which, why don't they fix the public health system (which they have totally cocked up) rather than implementing yet-another-expensive-state-enterprise which is doomed to fail.

  • Tolerant - 2011-08-11 13:32

    The tax burden on employers only might be a mistake. High increases in costs for bosses might make them to close it down. Rather increase Vat a few % to help.

  • Bill - 2011-08-11 13:36

    Sure...just create additional taxes to pay for it clandestinely Maybe more Toll taxes, or how about a poop tax, every time we flush the loo take a buck or two!

  • AceOfSpades - 2011-08-11 13:41

    "South Africa will fund a proposed National Health Insurance (NHI) programme through the fiscus, EMPLOYERS’ CONTRIBUTIONS". I get paid on a cost-to-company basis, like many skilled professionals, thus, in my world, there is no such thing as an 'employers contribution' - it's my flesh that the pound gets cut from.

  • Acs - 2011-08-11 13:44

    What !!!! The public funding IS tax ie people's money! We have bad, under staffed, poor service public hospitals. Who caused it to degrade so much that we the people now have to pay double. Increase VAT, increase inflation Then atleast everybody contributes NOT just the few "previously advantaged" section of the population.

      phunkylizzy - 2011-08-11 16:18

      Just political, buying votes for next years election from people who do not want to pay because they are too poor.

      phunkylizzy - 2011-08-11 16:21

      who is the "fat cats" who is going to be on the board of this money generating scheme? -- Stupid question?????

  • Hangmann - 2011-08-11 13:45

    I like this mans thinking. Sadly though, the current national healthcare is a balls up so I don't see this one working to well either.

      phunkylizzy - 2011-08-11 16:23

      Are you one of those that have to foot the bill ??? I think not.!

  • Collitjies - 2011-08-11 14:05

    Increasing VAT will immediately fall squarely on the poor and destitute. Pensioners will also feel the brunt. Poor will become poorer. At present cancer sufferers are being turned away through lack of essential medication, will it ever change for the better I fancy not.

  • grant9 - 2011-08-11 14:09

    The country has gone mad! The minister of finance states that the taxpayer will not be taxed extra for the NHI but goes on to say the money will come from the fiscus, increased VAT and surcharge on taxable income. This all means that the taxpayer WILL have to pay more. Those countless billions will have to come from us. If employers are taxed more they will increase prices, lay off staff or close down. A lose/lose situation.

  • Norman DePluhm - 2011-08-11 14:13

    How can it possibly need that much time and money to implement. Like everything else, just FIX AND RUN PROPERLY the facilities we ALREADY HAVE. Then take a long hard look at the medical insurance/finance industry and fix that. If the Hypocratic Oath were abided by, and if big Pharma and her friends played fair, we wouldn't have a problem.

      phunkylizzy - 2011-08-11 16:26

      You said brother!!!! Good for you.

  • York Hunt - 2011-08-11 14:26

    He didn't say there won't be an increased tax burden! Look at what he said carefully: But Gordhan said: “We don’t want to burden anybody more than they need to under normal taxation." This is classic doublespeak, people!

      Pharo - 2011-08-11 16:51

      Animal Farm speak!

  • umlaut - 2011-08-11 14:30

    How can that be?--just the other day it was said that business must aid schools because there are no funds and then the KING got a +bil. bailout and now the +100 bil is available for health---we are extremely DOF SA--They are just going to Print extra money--like they did in ZIM. Actually then we don't have to pay taxes--the money will fall out of the sky.

  • umlaut - 2011-08-11 14:32

    Couldn't they just make a plan like that with the toll roads also???

  • Manningi - 2011-08-11 14:38

    What is an income tax "surcharge" if not additional tax?

  • Antoinette - 2011-08-11 14:41

    ooooh....."We don’t want to burden anybody more than they need to under normal taxation." But, if you increase VAT, you ARE adding burden. If you are adding surcharges on taxable income, you are adding burden. Or, perhaps I'm just stupid and don't understand how that works??? Why is it that everytime the government implements a new idea, I get poorer but somehow they live better???

  • JohnnySolo - 2011-08-11 14:44

    Just read this statement again: Gordhan said the government did not want to increase the burden on taxpayers with the introduction of the NHI and the programme will be funded through the public finances, contributions from employers, surcharges and partnerships with the private sector. So, where is the R125 BILLION (next year nogal) going to come from? 1. They can't even fix the potholes - the public finances are bankrupt. 2. 90% of the people who will "benefit" from the NHI aren't employed. So they won't be generating "contributions from employers". 3. Surcharges, eh! Okay, on what? Cigarettes, parking tickets, etc. I don't think so. 4. "Partnerships with the private sector"? God help the Private Sector! It's yet another nail in the coffin of a once thriving country that is now in tatters.

      Dougalan - 2011-08-11 15:32

      I suggest that the ANC ministers cut their salaries down by two-thirds, do not buy cars costing more than R400 000, and have to keep them for 3 years, also prosecute people like Cele who is costing SA hundreds of millions. That will be a start that shows the ANC is serious about 'not burdening anybody more than they need to'.Truly, man speak with forked tongue.

      TheReal_BraDarkie - 2011-08-11 16:07

      Another interesting issue about your point 2 is productivity. Overcrowded hospitals would mean it would take longer for the employed to get back to work (from sick leave). This will surely affect productivity. The developed economies are not affected as SA would because of the unemployment rate.

  • Sharkie - 2011-08-11 14:59

    Why don;t they use the obsecene amounts of money they will earn with the new toll gates to fund this?

  • FatherGoose - 2011-08-11 15:13

    Hand-waving tripe. Surcharges = tax. Money from employers? Well, that means employers have less money to pay staff. Might as well be a tax. The only difference is that doing it that way burdens everyone with an income (other than casual labour) rather than the very small number of people who pay income tax. Which is something, at least. But a tax by any other name is still a tax. Just call it that and be done with it.

  • Boerseun - 2011-08-11 15:19

    I do not trust one word of this. In the end they will have no choice but to pillage taxpayers yet again. Taxes is nothing more than pillaging of a population under concent of the ruler of the day and for his profit. History makes this very clear.

  • george60 - 2011-08-11 15:27

    You can have ALL the money in the world, if the administration of the new NHI is management by the current ANC incompetent staff, it will be another failure. Who will manange the tenders for the NHI, hope not the current lot, then you will see new billionares by the hundreds every year.Who will provide trained medical staff countrywide, currently its a joke? Currently in Gauteng 4 hospitals don't have medication to treat cancer patients. Patients are turned away,because the administration has not paid the suppliers? Another failure by the ANC? How the voters can trust the ANC and still vote for them seems to me senseless?. Or is it a case of 'this is the way we will run South Africa into total bankruptcy'?

  • illwill69 - 2011-08-11 15:32

    so, no direct tax, just indirect tax. yulp yulp

  • Leon Haywood - 2011-08-11 15:49

    My previous post was deleted. I'll say it again. Give it 5 years and S.A will be completely bankrupt. Toll roads, NHI, and the national savings plan will ruin this country.

  • York Hunt - 2011-08-11 16:09

    They are going to borrow the money from International Banksters (at compound interest), then steal a large portion of it for themselves and then have the SA taxpayer foot the bill! Hey, it worked for the Arms Deal - why not do it again?

  • nibbie - 2011-08-11 16:30

    R125 Billion spread over say 10 million individual taxpayers = R 1000 / month average contribution. I think they just broke the taxpayer piggy bank. How long does the Government expect the honest taxpayer to increasingly support the unemployable masses? I don't mind paying tax if I can see that I'm getting a bang for my buck. All I see is we're getting shafted more and more.

      clark - 2011-08-11 17:04

      - Goverments dont create wealth or generate income. Any funding coming from existing public finances ,simply means other spending priorities like education and housing will suffer. The mere fact that he alludes to ' contributions and surcharges' from employers can only mean one thing - the private sector will be footing this ludicrous NHI plan.

      p123 - 2011-08-11 18:38

      10 Million, there are only 2.5 million actually paying taxes. This will just be another avenue for corrupt ANC cadres to enrich themselves. Malema will soon be in the medical trade!!! Sickens me to the core. Tax the Minibus Industry Pravin, there are Billions to be had there fool.

  • Bullhunter - 2011-08-11 16:34

    Pravin has served his purpose. Time to go back to pharmacy practice.

      gcr - 2011-08-11 18:14

      Yup - he sure hasn't brought any sourcerers magic to the party since taking over as min fin

  • capetonian - 2011-08-11 16:59

    Why doesn't the Government get the Hospitals sorted out - seeing that most of their CEO's are not qualified for the job!! How many arms of Government are incompetently run, suffering from a combination of maladministration, nepotism and corruption? More money to find its way into the hands of the comrades - perhaps Gordhan can give us examples of successful National Health Insurance schemes in 3rd World countries? Hell, the Poms battle to get their National Health to run efficiently, and that's a 1st World state!

  • Duncan Gohl - 2011-08-11 17:04

    Most of the cash will be stolen, finis 'n klaar !

  • Cynic - 2011-08-11 17:11

    What worries me is that this is a form of subsidy, and I have NEVER seen any subsidy that is not looted by unscrupulous elements, resulting in defeating its objectives completely.

  • shimane.harris - 2011-08-11 17:52

    Instead of funding the country`s poor government should seek to improve the public health care system. This is only to inrich the already well off private sector. As it is private medical aid`s are expensive, yet they dont cover half the consultations. Government will not be able to provide enough funding to sustain enough consultations through the prvate sector.

  • george60 - 2011-08-11 18:15

    Pravin we all are not that stupid,any money the goverment wants come from the person with a job, from pensioners or any other assests that you have. Stop saying that the goverment would not raise more taxes, what are these surcharges, levies and contributions from employers other then taxation? For the man in the street this is a another burden to correct wrong of the goverment of the day!!! From the goverment side it will be appreciated if all these extravagant car allowances be stopped immediately,this will be a few billion ?

  • M - 2011-08-11 18:15

    But on the radio news I heard them saying that all South Africans with an income are expected to contribute to the "fund" based on their income. Does this mean that the millions on support grants will have these grants decreased? If not, then it IS just another tax. And what is going to happen while the pilot phase is being introduced and the fund introduced in the rural areas. Will the average taxpayer have to still pay his/her regular medical aid contribution and the NHI contribution? Will our regular medical aid contributions be decreased to accommodate the portion we HAVE to pay to the fund. The answer to the above is a big fat NO, so once again we are being screwed.

      Mandla - 2011-08-11 19:16

      You are right,more explanation is needed for people to understand what will be required from them.

  • Chris - 2011-08-11 20:13

    It's actually a good idea to have a publicly-owned health insurance agency. If properly run and designed it can act to drive up the minimum standard of medical aid policies provided by private companies while also applying pressure to keep prices low. Look at Medibank Private in Australia as an example. This will benefit everyone because at the moment, medical aid providers in South Africa do not give value for money and try their hardest to find reasons not to cover medical expenses!

      JoggieRSA@24.com - 2011-08-12 09:53

      Run with OUR money!

      Leslie - 2011-08-12 14:03

      Chris, I agree that we do not get value for money with the current Med aids. My daughter had to undergo batteries of tests in Jan this year, and by 13 Feb, our savings were exhausted. But my concern is that we are going to have a flood of foreigners coming in and using the services and not contributing. If you are in the UK, as I understand it, and you need treatment, and their NH can not provide it, you can go to another EU country for it. Let's face it, in Africa there will only be one place to go, the already overburdened SA medical system. You would just have to look at the other options to understand that, by comparison, what we are aiming for, will be far superior to what is available in other countries. I love Africa, but as they say, Africa is not for sissies!

      RFreeThinker - 2011-08-13 02:18

      It's not a good idea. It's better to use that 8.7% GDP to reform the state health system. There should be anti-racketeering laws already to prevent industry collusion. Bigger government = more mismanagement. And if health is so important then people should be more responsible for their own. Less luxury spending for example. There are people who don't buy medical aid but spend cash on better cars, luxury goods and furniture. Priorities. Sadly personal responsibility is lacking.

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