{"id":1385,"date":"2023-09-11T10:26:28","date_gmt":"2023-09-11T10:26:28","guid":{"rendered":"https:\/\/www.innov8fs.co.za\/blog\/?p=1385"},"modified":"2026-03-18T11:46:25","modified_gmt":"2026-03-18T11:46:25","slug":"godongwana-suffers-a-bout-of-the-nhi-jitters","status":"publish","type":"post","link":"https:\/\/www.innov8fs.co.za\/blog\/2023\/09\/11\/godongwana-suffers-a-bout-of-the-nhi-jitters\/","title":{"rendered":"Godongwana suffers a bout of the NHI jitters"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-1386\" src=\"https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2023\/09\/Godongwana-suffers-a-bout-of-the-NHI-jitters.jpg\" alt=\"\" width=\"1200\" height=\"800\" srcset=\"https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2023\/09\/Godongwana-suffers-a-bout-of-the-NHI-jitters.jpg 1200w, https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2023\/09\/Godongwana-suffers-a-bout-of-the-NHI-jitters-300x200.jpg 300w, https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2023\/09\/Godongwana-suffers-a-bout-of-the-NHI-jitters-1024x683.jpg 1024w, https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2023\/09\/Godongwana-suffers-a-bout-of-the-NHI-jitters-768x512.jpg 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p>Enoch Godongwana, South Africa\u2019s Finance Minister, would prefer investing in government-run hospitals and healthcare infrastructure over implementing the NHI Bill.<\/p>\n<p>During\u00a0<strong>News24\u2019s On The Record Summit<\/strong>, Godongwana stated that the country requires some form of universal health coverage, but at present, it lacks a sustainable funding source.<\/p>\n<p>\u201cI am not worried about the number of people who currently rely on public hospitals. They do it today already. The system is already under pressure now,\u201d he said \u2013 adding that the NHI may not be the best solution to this problem.<\/p>\n<p>\u201cThe mechanics of it are difficult. If you ask me,<strong>\u00a0I would rather we invest more in upgrading our hospitals and our infrastructure to make them more attractive to everybody<\/strong>,\u201d said Godongwana.<\/p>\n<p>\u201cIn that sense, you can make private provision of healthcare irrelevant. For now, we have not done that,\u201d he added.<\/p>\n<p>The minister noted he is still unsure how the NHI will work as the Bill passed by the National Assembly \u201cis missing a lot of things\u201d. In particular, it is missing a source of funding that is sustainable.<\/p>\n<p>Godongwana\u2019s concerns align with a recent<strong>\u00a0report<\/strong>\u00a0compiled by the Solidarity Research Institute (SRI), which noted that South Africa\u2019s National Health Insurance (NHI) plan requires an additional R300 billion, which the country\u2019s strained budget and taxpayers cannot afford.<\/p>\n<p>According to seasoned economist Dawie Roodt, South Africa\u2019s fiscal deficit for 2023 is set to be between 6% and 6.5% of gross domestic product (GDP), much higher than the minister\u2019s expected 4%,<\/p>\n<p>Roodt added that Godongwana said the government wants to stabilise South Africa\u2019s debt level at 70% of GDP, but it has already increased to 72%. He further expects the country\u2019s debt to increase to 75% of GDP by the end of the year and reach 80% by the end of 2024.<\/p>\n<p>Roodt noted that South Africa currently spends 20% of tax revenue on servicing debt. This debt service cost crowds out other much-needed expenditures \u2013 crippling the government\u2019s ability to invest in essential sectors like healthcare and education.<\/p>\n<p>According to the SRI report, in 2026 (the year in which the NHI is supposed to be implemented), an enormous extra R300 billion will be required in order to balance the books. This means healthcare would be the biggest item in the South African budget by far, at a total cost of R660 billion.<\/p>\n<p>The report found that\u00a0<strong>R300 billion could theoretically be generated by abolishing the medical tax credit (about R30 billion) and<\/strong>\u00a0<strong>levying the following taxes:<\/strong><\/p>\n<ul>\n<li>A 40% surcharge on income tax<\/li>\n<li>Increasing VAT from 15% to 22%<\/li>\n<li>A payroll tax of 13.4%<\/li>\n<li>Increasing corporate income tax from 27% to 45%<\/li>\n<li>A combination of these<\/li>\n<\/ul>\n<p>\u201cIn real terms, none of these is possible because the South African taxpayer is already overtaxed.\u00a0<strong>These theoretical suggestions serve for illustration only and to demonstrate their absurdity.<\/strong>\u201d<\/p>\n<p>The report\u2019s concern regarding the Bill\u2019s need for significant changes to tax in South Africa is shared by Discovery Health CEO Ryan Noach and Roodt, who both warn this strategy will result in a tax revolt in the country.<\/p>\n<p>According to Roodt, only 1.12% of taxpayers (roughly 163,702 South Africans) pay 30% of total personal income taxes in the country, while 19% pay a whopping 87% of total personal income taxes.<\/p>\n<p>Additionally, a staggering 0.09% of corporate taxpayers (only 770 companies) pay 62.5% of total CIT, with 4.4% paying 95% of total corporate income taxes.<\/p>\n<p>\u201cThis means the country has an alarmingly narrow tax base, which is a massive concern for the state\u2019s finances. You cannot increase this.<\/p>\n<p>\u201cIf this increases, the tax base will collapse as many of the 1.12%, as well as businesses, will simply leave the country \u2013 which they are already doing,\u201d said Roodt.<\/p>\n<p>Noach added that even if these taxes were adjusted to meet the needs of the NHI, it would only get the government to around 50% of what the scheme requires. \u201cThese three scenarios are entirely unfeasible. You don\u2019t need to understand that there will be a tax revolt. You will never raise it,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Enoch Godongwana, South Africa\u2019s Finance Minister, would prefer investing in government-run hospitals and healthcare infrastructure over implementing the NHI Bill. During\u00a0News24\u2019s On The Record Summit,&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1385","post","type-post","status-publish","format-standard","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=1385"}],"version-history":[{"count":1,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1385\/revisions"}],"predecessor-version":[{"id":1387,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1385\/revisions\/1387"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=1385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=1385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=1385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}