NHI nightmare will destroy all

When it comes to money, South Africa’s struggling middle class seems to be caught in an “El Nino” effect economic situation… it doesn’t rain but it pours.

The cost of living is soaring as every purchase has increased – from petrol, to food, to the interest rate for those with debt, never mind increasing municipal rates and rising power prices (and Eskom wants even more).

ALSO READ: Increasing taxes to fund NHI will ‘destroy economy’ – expert

Most companies have been giving employees increases which are barely in line with inflation, while many workers have gone backwards in real money terms in the past five years. But there is even worse pain for our purses on the horizon as the government seems hell-bent on implementing its Utopian dream of health care for all with the National Health Insurance (NHI) scheme.

Worryingly, that horizon might be closer than everybody thinks as the government contemplates eliminating tax breaks for those contributing to medical aids. What the removal of tax credits will do is push the middle-class toward the financial brink – and lower income earners and families struggling to raise kids and keep a roof over their heads will be hardest hit.

ALSO READ: NHI: what about medical schemes and medical insurance?

Tanya Tosen, remuneration specialist at Tax Consulting SA, calculated that for a family of four the loss of disposable income would amount to R1 220 per month, or R14 640 per annum. A family of two would experience a monthly decrease of R728, equating to R8 736 annually. Individual net take-home pay would decrease by R364 per month or R4 368 per year.

Adrian Gore, CEO and founder of Discovery, estimates that the NHI will cost upwards of R200 billion but that to try to raise that money through increasing taxes will “destroy the economy”. He says the NHI is “not doable without wrecking the employed sector”. We hope, against hope, that someone is listening.

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