Tax increases to pay for Covid-19 vaccine under consideration — report

Higher taxes for individuals and on booze? Both are being mulled by government to help fund Covid-19 vaccines.

As the government’s efforts to secure supplies of Covid-19 vaccines find growing success, the Treasury is considering raising taxes as one of several possible mechanisms to fund the biggest vaccination drive in SA’s history.

Treasury director-general Dondo Mogajane said the government viewed Covid-19 vaccines as a public good and was committed to financing their rollout, with or without support from the private sector and medical schemes.

“SA will not take us seriously if I can find money for SAA but not for vaccines,” he said in an interview with Business Day on Sunday.

The health department has estimated a maximum cost of R20bn to vaccinate the entire country, while more recent internal estimates done by Treasury are far lower than this, the newspaper reported.

The government also has scope to use provisions in section 16 of the Public Finance Management Act, which allows it to make appropriate funds available through parliament in an emergency, outside the budget process.

Steeper taxes on alcohol are also among the measures the government is considering.

In an interview with the Sunday Times at the ANC headquarters in Johannesburg on Friday, President Cyril Ramaphosa said steps have to be taken given the pressure alcohol abuse places on the health care system. The president said consumption had dropped in countries where liquor taxes had been raised.

However, SA’s alcohol industry has called for a deferment of excise duty, which would amount to about R2.5bn a month, in a bid to keep business closures and job losses at bay. Vinpro, which represents 2,500 local wine producers, said the industry is facing an enormous financial crisis and  its capacity to make these tax payments is severely constrained.

Alcohol sales have been banned for three separate periods since the Covid-19 lockdown was first imposed at the end of March last year. The latest ban started just before New Year’s Eve and is not due to be lifted before February 15 at the earliest.