Bidorbuy founder and uAfrica MD Andy Higgins said the government can fund the COVID-19 vaccine in South Africa by offering it to people who are willing to pay a high price for it first.
The government is under severe pressure to acquire a vaccine soon after it failed to engage early enough with vaccine suppliers to get the vaccine.
Many countries have already started to vaccinate their citizens against COVID-19, including Israel, Bahrain, the UK, United States, and China.
South Africa, in comparison, have only recently approved the distribution of a COVID-19 vaccine from India.
According to President Cyril Ramaphosa the government has secured 20 million vaccine doses, but details about these COVID-19 vaccines remain sketchy.
These also does not seem to be a coherent vaccine rollout plan which prompted the DA to threaten legal action if Ramaphosa does not provide further details.
Another problem is funding. President Ramaphosa said the vaccination campaign will cover 67% of the population, at a cost of approximately R20 billion.
The government did not budget for this cost, and the government is now considering increasing public borrowing or raising taxes to fund South Africa’s vaccination drive.
South Africa’s debt is already at concerning levels and increasing taxes will hamper economic growth at a time when it is desperately needed.
Let rich people pay for the vaccine
Recent news that billionaire Johann Rupert flew to Switzerland to get the Pfizer-BioNtech vaccine shows that rich people are willing to spend a lot of money to get the vaccine as soon as possible.
There is currently high demand and limited supply of COVID-19 vaccines, especially those which are more likely to be effective against the 501Y.V2 variant which is widespread in South Africa.
This creates a unique opportunity where rich individuals and companies are willing to pay far above market value to get the vaccine.
The government can make the most of this opportunity by allowing medical aids and hospital groups to distribute the vaccine early, but at a high cost.
Higgins said he acknowledges that this is a controversial proposal, but it has the potential to fund the government’s COVID-19 vaccine rollout.
“What if government offered the first 100,000 vaccines to South African’s willing to pay R10,000 each?” Higgins said.
“That would generate R1 billion to spend on even more vaccines. Think of it as a willing wealth tax. It is also cheaper than flying to another country,” he said.
If companies decide to fund vaccinations for employees and their families, such a programme has the potential of raising billions for the government’s planned vaccine rollout.
Since it will be handled by the private sector the government will merely collect a wealth tax which was voluntarily given to them by rich people and companies.
Cut state spending instead of raising taxes
Another proposal came from Outa chairman Wayne Duvenage who said raising funds for the COVID-19 vaccine is an opportunity for the government to show it is serious about reducing the cost of a bloated government, unprofitable SOEs and recovery of funds lost to corruption.
“Funding by way of increasing taxes should be regarded as the worst and last-resort option,” said Duvenage.
“South Africa’s tax base is diminishing and overtaxed. By trying to squeeze more blood out of this stone, the state will merely drive further investment and savings offshore,” he said.
He said widening the budget deficit or borrowing from international sources are better options than raising taxes, but they also pose dangers to the economy under our current conditions.
Instead, he said, the state must demonstrate its competence and ability to find these funds, in a manner which citizens can respect. This includes:
- Place an immediate ban on purchasing vehicles, property and other assets for political office-bearers, at all levels of government.
- Merge a number of ministries and departments and reduce the bloated size of government.
- Reassess SOEs. There are more than 300 SOEs, many of which are superfluous and running at a loss.
- Recover R11 billion of state funds from organisations which helped to loot Transnet and Prasa.
- Stop excessive spending of state office rentals with the private sector, whilst Government offices remain empty and in disrepair.
- Call on MPs to introduce acute awareness and oversight of wasteful and dishonest spending by Cabinet and members of parliament.
- Cut the budgets of those government departments with high irregular expenditure that adds up to billions of rand each year.
- Reassess the viability and impact of some lockdown restrictions on businesses. The loss of excise duties from the alcohol ban needs to be revised.
Andy Higgins proposal
A controversial thought. What if government offered the first 100,000 vaccines to South African’s willing to pay say R10k each? That would generate R1bn to spend on even more vaccines. Think of it as a willing wealth tax. Cheaper than flying to another country #CovidVaccine
— Andy Higgins (@andyhza) January 16, 2021