Funding the NHI - Earmarked Tax

This note investigates the ANC proposal of funding the additional expenditure required for a NHI system with an earmarked tax. Since it would represent only a small proportion of the NHI budget (and be a so-called weak earmarked tax), we find that it does not seem to support the main rationale proposed in the discussion document.1 Hence, there does not seem to be a strong argument for implementing an earmarked tax rather than using general taxation. Next we discuss the implications of the increase in taxes, which is likely to be highly progressive and to have severe implications for families paying personal income tax (i.e. largely the medical schemes members).