Sin taxes will not be used to fund health-care‚ says minister
While such funds have been earmarked in the past, Zweli Mkhize says the Treasury is hesitant about using them due to a host of reasons
The health department is not considering using alcohol and other sin taxes to help fund the country’s healthcare sector.
This is according to health minister Zweli Mkhize‚ who was responding to a parliamentary question posed by the leader of Al Jama-aha‚ Mogamad Ganief Ebrahim Hendricks‚ this week.
Over the past few months‚ the effects of alcohol on the healthcare system were thrust into the spotlight as the country tried to halt the spread of Covid-19.
The sale and distribution of alcohol were re-introduced in June‚ more than two months after a ban was implemented on March 27. But a second ban was imposed in July with President Cyril Ramaphosa insisting it was to help reduce trauma-related injuries in hospitals.
Under lockdown level 1‚ however‚ the sale of alcohol for home consumption is now allowed from Monday to Friday‚ 9am-5pm. Under level 2‚ it was allowed to be sold from Monday to Thursday.
The regulations restricting alcohol sales sparked heated debates about the role the alcoholic beverage industry plays both in society and the economy.
Mkhize said his department had previously looked at using alcohol and other sin taxes to help fund the healthcare sector but the National Treasury was reluctant to accept the proposal, but has, however, earmarked such funds.
“The earmarking is usually legislated and would usually lead to all or a portion of the funds being used to finance healthcare services in general or a specific aspect of healthcare‚ for example, messaging on the harmful effects of alcohol. This legislative mandate lies with the minister of finance‚” said Mkhize.
Mkhize said that, historically, the department of health has raised the earmarking of sin taxes‚ including alcohol‚ tobacco and sugar‚ as an option with the Treasury.
However‚ the Treasury has been hesitant to accept earmarking such funds‚ citing that it introduces rigidities in the budgetary process‚ limiting the availability of funds for other and sometimes more urgent purposes; it can lead to a waste of resources when not carefully planned by the recipient institution/programme; when tax revenue collection is low then the dependent programme will be negatively affected and this may result in fragmentation of pooling and similar demands from other sectors; it will eventually shrink as consumption of harmful/unhealthy products declines.
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