<\/p>\n
Finance Minister Enoch Godongwana says the decision to adjust medical tax credits for inflation in the 2026 Budget is a \u201cpragmatic response\u201d to legal uncertainty surrounding the National Health Insurance (NHI), which is currently legally challenged.<\/p>\n
Speaking at a post-budget event in Cape Town hosted by RMB, Godongwana acknowledged that ongoing court challenges are stalling progress with the NHI.<\/p>\n
Listen\/read:
Medical tax credit increase offers limited relief to households
Slight relief for overburdened individual taxpayers<\/p>\n
Asked by a member of the audience what the reason for adjusting the tax credits was, Godongwana responded: \u201cWe are in court. There are 14 cases \u2026 These cases will take us a while. And we won\u2019t be able to continue with the NHI,\u201d he said, adding that government and the private healthcare sector need time \u201cto find each other on these issues\u201d.<\/p>\n
In the 2026 Budget, National Treasury announced an inflationary increase in the medical tax credit and rebates \u2014 the first in two years.<\/p>\n
Read: Scrapping medical tax credits not on the cards \u2013 Godongwana<\/p>\n
The adjustment to medical tax credits comes despite repeated assertions by Health Minister Aaron Motsoaledi and health department officials that the credits will be phased out and the savings redirected to fund the NHI.<\/p>\n
Legal limbo<\/strong><\/p>\n Godongwana stressed that the medical tax adjustment should not be interpreted as a retreat from universal health coverage.<\/p>\n \u201cFor now, it\u2019s difficult for me to not allow the growth of [medical] credits while we are waiting for an outcome [on the NHI]. That\u2019s why there\u2019s the marginal increase in the tax brackets for now. But it does not negate the NHI.\u201d<\/p>\n ADVERTISEMENT<\/p>\n CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n Godongwana said a lot of the design and planning of the NHI still need to be ironed out.<\/p>\n<\/blockquote>\n \u201cWe need to say \u2013 how will we roll it out? What is going to be covered by it \u2013 that will determine its cost.\u201d<\/p>\n Only once the benefits package is clear can government decide how to fund it and how services will be delivered.<\/p>\n \u201cI made the point yesterday [in the budget speech] that we will be upgrading certain facilities in preparation for the NHI,\u201d he added.<\/p>\n Private sector seen as partners<\/strong><\/p>\n Godongwana also signalled a more conciliatory stance toward the private healthcare industry, which has led many of the legal challenges.<\/p>\n \u201cThere\u2019s a willingness on the part of government now \u2026 that we need to find one another on some of these issues so that we can move with speed,\u201d he said.<\/p>\n He suggests that negotiations outside the courtroom will be essential to defining the eventual system.<\/p>\n<\/blockquote>\n He also says talk about the NHI\u2019s high costs is premature. \u201cThere\u2019s a rumour that it\u2019s a monster; that it\u2019s too expensive. But I don\u2019t have a number.\u201d<\/p>\n Listen\/read: Court-ordered NHI pause opens door to policy rethink<\/p>\n ADVERTISEMENT:<\/p>\n CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n Meanwhile, the NHI\u2019s rollout plans have been halted after President Cyril Ramaphosa and Motsoaledi undertook not to proclaim any provisions in the legislation pending the court hearings.<\/p>\n During a recent interview with Jeremy Maggs on Moneyweb@Midday, Health Funders Association CEO Thoneshan Naidoo said the pause creates space to \u201creset this framework\u201d and explore collaborative solutions between public and private sectors.<\/p>\n Fiscal framework and policy credibility<\/strong><\/p>\n Godongwana was also pressed on the absence of a formal fiscal anchor in the budget \u2013 an omission that elicited criticism from economists and rating agencies.<\/p>\n He responded that any anchor would only be credible if future administrations commit to a clear fiscal path and parliament enforces compliance.<\/p>\n \u201cOn the monetary side we now have an inflation anchor, which is at 3%. That determines where monetary policy is going. A similar exercise is necessary on the fiscal side to provide credibility for our fiscal path.\u201d<\/p>\n Read: Government wants a \u2018credible and principle-led\u2019 fiscal anchor<\/p>\n He said it would, however, elicit a \u201cmajor debate\u201d.<\/p>\n \u201cWe intend to have intensive engagements with all political parties. We also need some regulatory framework for that,\u201d he said, adding that detailed proposals could be finalised by October as part of the Medium-Term Budget Policy Statement.<\/p>\n Follow Moneyweb\u2019s in-depth finance and business news on WhatsApp here.<\/em><\/p>\n<\/p><\/div>\n\n
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