Mr Minister, a tip on NHI

• Hopefully, he has listened to views that the process is rushed and too ambitious

Iremember when I covered the budget as a reporter more than a decade ago and always found the Tips for Trevor section thought-provoking. There is no doubt they are taken seriously, and while many of these may not pass legislative muster, being far too subjective, it was good to see current finance minister Enoch Godongwana take a leaf out of Trevor’s book and ask for budget tips ahead of walking the tightrope which would be the 2024 budget.

The jury is out on whether the budget got everything right, but I think the minister is listening to the masses and knows that SA ’ s taxpaying public cannot simply be taxed into oblivion.

The budget hit the right notes on fighting corruption and fixing lumbering parastatals. Of course, coming in an election year, it also neglected to hit taxpayers with higher rates but did knock higher earners as there is no adjustment for inflation, while it found money to cover the increase in the public sector wage bill. Instead, it raided R150 bn from the gold & foreign exchange contingency reserve account to assist in paying down debt — but it is only a temporary fix. Increased revenue collection will come only when the economy is fixed — and policy at this stage remains woefully short.

Some ambitious schemes are recipes for disaster. For instance, while President Cyril Ramaphosa is “looking for this pen” to sign the National Health Insurance (NHI) Bill into law, the silence on the implementation of NHI was almost deafening in the budget. Apart from all the gung-ho talk from many in government, the minister was far more sanguine, ensuring systems are working first.

I daresay, he may be listening to some of the “tips” from the public and media that the approach to NHI until now has been too rushed and too ambitious, notably as to who will pull and control the purse strings of such a huge enterprise. Surely, no one civil servant answering to the government as a shareholder should have this much power

— look at what has happened at Eskom, and we are left with no doubt that this is a bad idea. The NHI was only really mentioned in the budget to the extent that it cannot be rolled out at scale yet, and more effort will go into improving the public healthcare system.

Paul Gering, tax partner, PKF Durban, points out that any move to NHI will surely impact medical tax credits. Therefore, you would have expected some initial announcements on how this transition will work or where the significant funds needed to make this new system work will come from.

Yet the budget did not mention phasing out medical tax credits at all. This phasing out is important as it will need to happen to ensure the money is shifted to the NHI. So, fortunately, no such major move yet, or even a hint of it.

All that was said was that the medical tax credits will not be adjusted to account for inflation: they will remain at R364 a month for the first two members and R246 a month for additional members. There is also no mention of any specific tax to fund NHI.

Medical tax credits are nonrefundable rebates used to reduce the normal tax a person pays. At R364 a month for the taxpayer who paid the medical scheme contributions, these rebates are significant to many people as they mean direct savings when pockets are severely cash-strapped.

Gering says you would have expected these credits to already have been capped considering NHI.

Is the lack of an increase in these credits in 2024 a warning of things to come? Without guidance we cannot be sure if their termination is pending. But we certainly hope the minister continues to read his “tips”, especially when it comes to the realities of trying to implement a scheme this large based on the political whims of others.

MEDICAL TAX CREDITS ARE NONREFUNDABLE REBATES USED TO REDUCE THE NORMAL TAX A PERSON PAYS