More for the poor – Budget 2005

Tax changes to medical scheme contributions, more money for primary health care and tertiary hospitals, hikes in tobacco and alcohol products and cheaper sunblock are some of the varied highlights in Budget 2005.

‘€œOver the past decade we have invested in meeting basic needs, expanded investment in municipal infrastructure and extended social grants to children and others in need.

In the decade ahead, we must invest in improving the quality of education, housing and health services,’€ said Manuel.

Manuel announced a change to the tax treatment of medical scheme contributions, which will have the effect of reducing the cost of medical scheme membership to lower income families.

‘€œExpanding medical scheme membership, and ensuring that public hospitals provide an accredited cost-effective service to both uninsured patients and medical scheme members, are critical hurdles to be overcome before a more inclusive social health insurance arrangement can be implemented,’€ said Manuel.

The present allowance for two-thirds of a medical scheme contribution to be paid tax-free will be replaced by a capped tax deduction.

The minister said this would have the effect of limiting the tax loss associated with more expensive medical scheme options, while increasing its monetary benefit to lower income taxpayers, thereby enabling more people to afford medical aid.

These changes will take effect in 2006.

The Budget makes available funds to enable provinces to fulfill their responsibility for primary health services formerly provided by non-metropolitan municipalities, and an additional R180-million a year for tertiary health services.

On the welfare front, Manuel announced a R40 rise in the old age, disability and care dependency grants (R780 per month), a foster care grants increase by R30 to R560 and a R10 increase in the child support grant to R180 a month.

The Budget also provides for improved salaries for social workers.

The comprehensive housing strategy has been allocated R2-billion and R1,7-billion has been given towards municipal and sanitation infrastructure.

In step with past increases, Manuel once again hiked excise on alcohol and tobacco products:

  • Tax on beer is raised by 11c per 750ml bottle or 5c per 340ml can;
  • Tax on fortified wine rises by 3c per 750ml bottle and on natural wine by 18c a bottle;
  • Ciders and alcoholic fruit beverages go up by 5c per 340ml can;
  • Duties on spirits are increased by R1,47 per 750ml bottle.

Duties on tobacco products increased by between 7 and 15 percent. A packet of 20 will cost 52 cents more.

These increases in alcohol and tobacco product duties will raise R1,6-billion in additional revenue.

In keeping with these health-related fiscal measures, Manuel announced the abolishment of excise duties on sun protection products at a cost of R10-million a year.

For the full Budget speech click here


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