The NHI wrecking ball entrenches SA’s terminal illness

By Doug Mattushek - 08 August 2019Views : 1285

By: The Free Market Foundation

The latest iteration of the NHI Bill has confirmed what South Africans have known for more than a decade: that taxes will need to rise to fund the government’s unworkable and unfeasible NHI scheme.

During these dire economic times, the NHI tax will be the final nail in the coffin for cash-strapped consumers struggling to make ends meet.

Since the funding for the centrally controlled and administered NHI Fund will necessarily come from a surcharge on taxable income and a payroll tax, the NHI is nothing but a tax on labour. A payroll tax will always, ultimately, be borne by workers, either through reduced earnings or compensation or job losses – precisely the opposite of what the poor in South Africa need.

While supposed to help people access medical care, the NHI scheme will undermine any chance of economic success by either cutting wages or eliminating jobs altogether and will entrench South Africa’s terminal economic conditions.

South Africa has a very narrow tax base and it would be extremely unwise for government to consider imposing another tax on already overburdened taxpayers to fund the NHI rather than trying to get more people actively involved in the workforce and adopting policies that will significantly increase the country’s economic growth rate.

The government’s centrally controlled NHI scheme will concentrate power in the hands of the state, which then acts as both a player and referee, leaving no room for the private sector to operate. Under the NHI, whether directly or indirectly, the government will control the availability, financing and delivery of healthcare from the cradle to the grave and South Africans will no longer have any choice.

The consequences of this politically motivated scheme are entirely predictable: the quality of South African health-care provision will fall, more health-care professionals will leave the country, the bureaucracy will be incapable of handling the huge volume of claims, an unnecessary and intolerable burden will be imposed on taxpayers, it will fail to improve the health outcomes of the poorest and most vulnerable members of society and it will result in further job losses.

The FMF is an independent, non-profit, public benefit organisation, created in 1975 by pro-free market business and civil society national bodies to work for a non-racial, free and prosperous South Africa. As a policy organisation it promotes sound economic policies and the principles of good law. As a think tank it seeks and puts forward solutions to some of the country’s most pressing problems: unemployment, poverty, growth, education, health care, electricity supply, and more. The FMF was instrumental in the post-apartheid negotiations and directly influenced the Constitutional Commission to include the property rights clause: a critical cornerstone of economic freedom.