# Ferial Haffajee: How NHI will send your taxes rocketing

- Link: https://dearsouthafrica.co.za/2019/08/16/ferial-haffajee-how-nhi-will-send-your-taxes-rocketing/
- Published: 2019-08-16T00:09:06+02:00
- Author: dearSA

![](https://cdn.dearsouthafrica.co.za/wp-content/uploads/2019/08/20191302/Screenshot-
2019-08-16T000424.032.png "MoreTAX")

I am a first-generation medical aid member and come from a family which was largely
dependent on public health.

My parents really struggled with inadequate healthcare for all their lives and I
wonder if my dad’s life would have been lengthened with better care.

My mom, who is now 89, is on medical aid because the governing ANC forced changes
to medical aid coverage to expand the definitions of dependents from the industry’s
Western notions of what family is. She is now on my brother’s medical aid. Some 
years ago, my old lady fell and broke her hip. It was replaced in two days and she
was walking in seven days. The waiting list for that operation at public hospitals
is months long.

The ANC also legislated that the private health insurance industry cover prescribed
minimum benefits to provide a guaranteed bottom line of services. The managed care
industry is notorious for limiting its risks, maximising its profits and cherry 
picking its clients, so public health regulation has been excellent at expanding
and extending service levels in the private sector.

The democratic government introduced free health care for women and children, which
changed many lives for the better and stronger, as I saw when I reported health 
just as apartheid gave way to freedom.

Life extending and health enhancing public health policies have made meaningful 
changes in the lives of so many South Africans. But government has decided these
are insufficient as the health imbalances are still acute.

Higher tax burden

Its national health insurance initiative is a further attempt at health reform but
the idea is poorly conceived and will add to the burden of already stressed income
taxpayers who have over recent years faced the highest tax increases.

There’s more to come once the NHI Bill becomes law, although it’s important to bear
in mind that that is only in 2026 – possibly much later – because the law as it 
stands faces many constitutional hurdles, says Wits University health economist 
Dr. Alex van den Heever.

Stripped of choice

It strips individuals of choice, since we will all become mandatory members of the
national health insurance scheme, a gigantic medical aid for the entire country.
But here’s the rub: government envisages that it will be run by a CEO and an 11-
person board appointed by the Minister of Health.

There is no history of democratic South Africa running either its funds or its state-
owned companies with its people in mind. And the panic that has greeted the unveiling
of the NHI bill is therefore understandable.

What it means for us is that, as envisaged by the draft law, your personal income
tax bill could shoot up by between 19% to 20%, says Van den Heever, according to
his early calculations.

This is because the drafters assume enough fiscal space to tax an additional 3% 
of GDP and this tax is likely to fall on our (working South Africans’) shoulders.

Corporate taxes are reckoned to be at their ceiling, and there is no way government
can push a VAT increase through without inciting a “revolution”, says Van den Heever.

The draft law says you can still buy a medical aid policy, but schemes will be highly
constrained in what they can offer because the formative idea is to cover all South
Africans in the national scheme.

[Article](https://m.fin24.com/Opinion/ferial-haffajee-how-nhi-will-send-your-taxes-rocketing-20190815)
by Ferial Haffajee and News 24