Tuesday 28 May

On 22 July 2011, SECTION27 made a written submission to the National Treasury on its proposal for the first phase of the conversion of medical deductions to medical tax credits.  The submission is available here.

Given the centrality of the right to have access to health care services in the work of SECTION27, the submission largely focused on the extent to which the National Treasury’s proposal for the conversion of medical deductions to tax credits – if adopted – would help to discharge the state’s constitutional obligations by contributing to the progressive realisation of this right.

In recognising that the National Treasury proposal – in and of itself – would serve to advance the goal of equity, the submission welcomed the contribution that it could make in advancing fundamental constitutional values and rights.  That said, however, the submission also identified a number of concerns that – if addressed – would go some way towards increasing equity.

In summary, SECTION27 recommended that the National Treasury address the following concerns before implementing the proposed changes:

  • While the proposed changes would promote greater equity amongst those who pay personal income tax, they do not address broader concerns relating to vertical equity.  In this way, the proposal seeks to perpetuate the status quo that effectively denies subsidies to those who struggle to afford medical scheme premiums and – most often – are worst affected by catastrophic medical expenses.
  • No serious consideration seems to have been given to considering mechanisms outside of the tax system that would allow for the system of credits to be extended to income earners who are at or below the personal income tax threshold.
  • The National Treasury’s proposal also does not demonstrate how (or indeed if) the proposed changes for those aged 65 and above and/or living with a disability would ensure greater equity; all it appears to show is that there would be a net gain in equity for all scheme members who earn above the relevant personal income tax thresholds.
  • In the absence of government’s policy document on National Health Insurance (NHI), which has yet to been finalised and published for public comment, it is not clear how the proposed changes will relate to and/or advance NHI objectives.