How Will the Suggested Funding Methods of the South African National Health Insurance Potentially Affect the Individual Taxpayers?

The constitution recognises health care as a fundamental right; however, transformation is still required in the health sector. To try and rectify the challenges faced by this sector, the government is therefore proposing the implementation of a National Health Insurance (NHI) that will cover the costs of healthcare for its national population irrespective of their socio-economic status. In doing so, some of the funds to provide to the NHI financial system is theoretically said to come from surcharge of income tax from individuals, introduction of NHI in payroll tax as well as an increase in Value Added Tax (VAT). The increase in these taxes may have a direct or indirect impact on taxpayers. The study design is based on a qualitative methodology and scenario-based approach. The qualitative literature review aims to explore the potential effects of the proposed NHI implementation through the analysis of the impact of increasing VAT. While the scenario-based approach illustrates the impact of the introduction of NHI in payroll taxes as well as the impact of VAT increase on an individual South African taxpayer. The findings suggest that the current South African tax base is narrow and the burden of funding the NHI will add to an already strained tax base. Without these contributions from taxpayers towards the fund, it may not be feasible for the government to implement the NHI.