Government proposes changes to conditional grants

Wednesday, October 25, 2017

Government on Wednesday announced proposed changes to health conditional grants over the Medium–Term Expenditure Framework (MTEF).

In the Medium Term Budget Policy Statement (MTBPS) tabled by Finance Minister Malusi Gigaba, government proposed changes to the grants saying a component will be introduced in the comprehensive HIV, AIDS and TB grant to standardise the Community Health Worker Programme.

It further stated that a portion of the direct health facility revitalisation grant and the infrastructure component of the indirect national health insurance grant will be ring-fenced for maintenance.

Additions of R22.4 million to the national tertiary services grant have also been proposed and will extend the diagnosis-related groups project across the Western Cape and build capacity for other provinces to implement this initiative.

The diagnosis-related group approach is a patient classification system used globally for payment of hospital services.

The MTBPS also noted that spending on the indirect school infrastructure backlogs grant has been poor for a number of years and was scheduled to come to an end in 2017/18.

“However, the Department of Basic Education needs to complete projects that are underway. Government now proposes that R7.3 billion that had been shifted to the provincially-administered education infrastructure grant, but had not been allocated to specific projects, be returned to the department’s school infrastructure backlogs grant over the 2018 MTEF period.”

Within the direct education infrastructure grant, the remaining R1.5 billion shifted from the school infrastructure backlogs grant in the 2017 MTEF will be ring-fenced to maintain existing school infrastructure.

Human Settlements        

Meanwhile, a full review of the human settlements development grant will be conducted based on the outcomes of the human settlements policy review. For the 2018 Budget, two new human settlements grants are proposed, both to be funded through reprioritisations from the human settlements development grant.

“Funds previously ring-fenced to clear the backlog of title deeds that have not yet been issued for homes built with state subsidies will now be allocated in a dedicated grant for a three-year period. The grant will have both direct and indirect components, with a small portion reprioritised for capacity in the national department.

A grant will be established to fund responses to emergencies in line with housing policy. The funds will be held by the Department of Human Settlements and transferred to provinces or municipalities following an emergency.

Funds to maintain coal haulage roads in Mpumalanga will be ring-fenced in the provincial roads maintenance grant for another two years.

Medical tax credit

When coming to medical tax credits, National Treasury is considering changes to the design, targeting and value of the medical tax credit as part of the policy development process for the 2018 Budget.

In the budget tabled in February, it was stated that consideration is being given to possible reductions in this subsidy in future. In 2012, government moved from a system of deductions for medical aid contributions and qualifying expenses to a system of tax credits independent of taxable income.

“National Treasury is considering changes to the design, targeting and value of the medical tax credit as part of the policy development process for the 2018 Budget. Tax data, however, indicates that the programme is well-targeted to lower and middle-income taxpayers. The National Treasury will seek input from the Davis Tax Committee on the feasibility of proposals to adjust the medical tax credit to fund the National Health Insurance (NHI),” stated the MTBPS document.

In 2014/15, 3 million taxpayers claimed the credit on behalf of 8 million medical scheme members, resulting in a tax expenditure of R18.5 billion.

Meanwhile, Treasury and the Department of Health is working on proposals to expand NHI services in a progressive and affordable manner.

“Legislation is being drafted to establish the legal framework for an NHI Fund. Government is considering options to establish an interim fund structure to support a limited set of priority interventions, and operate in line with current legislation.



Most Read

SAnews on Twitter