Finance Minister Tito Mboweni’s 2021 budget speech is expected to provide full details on the full cost of implementing the deployment of the Covid-19 vaccine in South Africa, professional services firm PwC said.
Given the improved revenue outlook for the country, the company said it expected the tax increases to be used to cover the cost of the vaccine. He added that the government is in talks with medical aid plans for funding for non-members.
“This would amount, in effect, to a tax on medical plans and would be borne indirectly by members of the medical plan,” he said.
While this is the ideal scenario, PwC said many analysts have reported possible tax hikes to fund the vaccine.
“We do not believe this is necessary, given the significantly improved short to medium term income prospects. However, much will depend on the ultimate clarity cost of deploying a vaccine – which would include not only the direct cost of the vaccines themselves, but also the cost of implementing a vaccination program.
As the National Treasury does not get funding from the private sector, PwC said it expects costs to be funded from existing revenue sources or debt.
This could be done either through a temporary increase in the spending ceiling, redefining spending priorities, using the contingency reserve, or a combination of all three, he said.
In a January interview with 702Director General of the Treasury Dondo Mogajane said South Africa typically gets money from two sources: taxes and market borrowing.
“Neither option is ideal, as you can imagine. However, at this point we are facing a pandemic and the President has confirmed that we will do everything possible to make sure we find the money, ”he said.
Mogajane said re-prioritizing existing budgets was an option; a second option was to borrow more and increase the deficit. The third option was to tax citizens to make up the deficit.
He said an official decision will be communicated in Finance Minister Tito Mboweni’s budget on February 24 and will be detailed in detail to indicate where the money is coming from.
Despite financial considerations, the CEO said that ultimately the decision was to save lives.
“Either way, we’ll have to bite the bullet, we have to do it for the sake of South Africans and save lives. We need to do everything in our power to make sure we buy these vaccines and get South Africans vaccinated. “
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