As consumers face increases in medical aid rates in the coming year, they also face the prospect of losing the tax credits they currently enjoy for paying for private healthcare.

The Star reports this is according to the National Health Insurance (NHI) presentation made by the Department of Health to the NCOP’s Standing Committee on Health & Social Services this week.

The department said the funds used to reimburse medical aid scheme members every year would instead be fed into the NHI Fund. 

SA Institute of Taxation CEO Professor Keith Engel responded it was clear that the department was moving ahead with the NHI despite opposition on all fronts.

Engel said there had been repeated discussions on eliminating the tax credits for medical aid.

‘They have been having that on the table for more than 10 years. No surprises there, they will continue to push,’ he said.

Engel said while it remained to be seen if the Treasury would follow through with the move, ‘what will fund NHI is a heavy load of new taxes, none of which we can afford, a battle for another day’.

Economist Dawie Roodt said he does not have a problem with taking away the tax break on medical contributions in theory, but that should be offset by a general lowering of taxes.

‘Theoretically the taxpayer should not get a tax break for medical contributions. There should not have been a tax break for your medical contribution in any event or your medical expenses. A tax system is supposed to be neutral and this is an example of non-neutrality.’

Full report in The Star