National Health Act, 2003 (Act No. 61 of 2003)

Notices

National Health Insurance Policy towards Universal Health Coverage

Chapter 7 : Financing of NHI

7.4 Raising Revenue to Finance NHI

7.4.2 Principles of tax design

7.4.2.1 Efficiency and Equity

Purchase

218.

Many tax reforms over the past two decades were aimed at broadening the tax bases and lowering rates. Increasing tax rates may generate higher revenue, but only up to a point, above which higher tax rates are counter-productive and revenue may decline. This is largely as a result of induced changes in behaviour and, in some instances, tax avoidance (and evasion) responses that have negative effects on the morale of taxpayers and the sustainability of revenues.

219.

Economic growth is needed to ensure an expansion of the tax base, and if tax revenue is rechannelled into the economy in the form of productive public expenditure, it will support and stimulate growth. An efficient and cost-effective health sector will lead to improved health outcomes that will improve productivity and enhance economic growth. Crucially, in order for taxes to play a role in promoting economic growth, revenues need to be collected, allocated and spent in an efficient manner.