Speculation on higher VAT to pay for health scheme

By Khanyisa Tabata
12 September 2011

An outcry is expected about apparent government plans to raise value-added tax to fund the national health insurance scheme.

Chief Director of economic tax analysis and tax policy at the Treasury, Cecil Morden, said at the annual meeting of the Government Employees' Medical Scheme that such a move could be justified on what he described as “efficiency grounds".

An increase in VAT would inflate the prices of food and other products, which would have dire consequences for the poor.

Morden cited Ghana, which uses VAT to pay for its national health insurance scheme.

He has warned that it was important to keep "an appropriate balance" between taxes.


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