da complaint about nhi
President Cyril Ramaphosa signed the NHI Bill into law. Photo: Stock/Canva

Home » NHI Bill: How much will you pay monthly?

NHI Bill: How much will you pay monthly?

Research into the affordability of the NHI shows that every formally employed South African would need to pay over R1,500 a month.

15-05-24 15:36
da complaint about nhi
President Cyril Ramaphosa signed the NHI Bill into law. Photo: Stock/Canva

The investigation into the NHI’s affordability underscores the role of the Department of Health’s funding projections, which necessitate a monthly contribution of R1,500 from each formally employed South African via a payroll tax.

SO, HOW MUCH WILL EACH EMPLOYED SOUTH AFRICAN PAY? 

As per a report by Business Tech, failing to meet the Department of Health’s funding estimations would lead to a significant financial burden for South Africans, with a potential 22% VAT or 30%-plus income tax hike to cover the shortfall.

FTI Consulting’s report examines the various methods to raise funds for initiating the universal healthcare plan.

THE GOVERNMENT COULD COLLECT ADDITIONAL TAX, BUT WILL IT BE ENOUGH?

The report cautions, however, that even with the additional tax collected, these funds may not be sufficient to cover the entire cost of the NHI, estimated at R600bn a year.

During a December 2022 presentation, the Department of Health stated a requirement for an extra R200bn annually to fund the NHI. However, analysts consider this estimate conservative, with more recent findings by the Solidarity Research Institute showing a prerequisite of R295.93bn.

WHAT WILL THE R200 BILLION EQUAL? 

In a report by the Daily Investor, the FTI clarified that the government’s indicated additional tax amount is not the total cost of the NHI, as it will likely need much more to implement fully.

For context, R200 billion equals –

  • 12.8% of South Africa’s current gross tax revenue
  • 36.1% of personal income tax
  • 62.4% of corporate income tax
  • 51.2% of VAT

FTI pointed out that any funding must come from taxes. The government has already confirmed that taxpayers will foot the bill for the scheme.

However, any tax changes would require the National Treasury to propose a Money Bill. The passing of the NHI Bill, and even signing it into law, does not change any taxes.

SOUTH AFRICANS AND EXPERTS STILL REMAIN DIVIDED ON THIS

Meanwhile, a report by Business Tech reveals that economists are divided on this issue, with many predicting that the Treasury will likely skip it for now.

However, reports suggest that in an election year, voters may find the prospect too ‘exciting’ to ignore entirely, especially with tax credits potentially at stake.

RAMAPHOSA WILL TODAY SIGN THE BILL INTO LAW 

President Cyril Ramaphosa will publicly sign the National Health Insurance (NHI) Bill into law

He believes this directs the transformation of South Africa’s health care system to achieve universal coverage for health services and, through this, overcome critical socio-economic imbalances and inequities of the past.

The signing ceremony will occur at the Union Buildings, Pretoria, at 14h00.