IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/wp-2020-30.html
   My bibliography  Save this paper

Shifting from deductions to credits: Unpacking the distributional effects of medical expenditure considerations in South Africa

Author

Listed:
  • Senia Nhamo
  • Edinah Mudimu

Abstract

The recent National Health Insurance White Paper proposes redirection of medical tax credits revenue towards the financing of the national health insurance. This raises critical questions about the impact on affordability for the poor as well as fundamental legal implications. The 2012 tax reforms which saw the move from deductions to credits were justified on the basis of equitable income redistribution. This paper examines the redistributive effects of the medical tax credit system.

Suggested Citation

  • Senia Nhamo & Edinah Mudimu, 2020. "Shifting from deductions to credits: Unpacking the distributional effects of medical expenditure considerations in South Africa," WIDER Working Paper Series wp-2020-30, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2020-30
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2020-30.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 95-130, March.
    2. Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr. & Lopez-Feldman, Alejandro, 2005. "Remittances, Inequality and Poverty: Evidence from Rural Mexico," Working Papers 60287, University of California, Davis, Department of Agricultural and Resource Economics.
    3. Ben Jann, 2016. "Assessing inequality using percentile shares," Stata Journal, StataCorp LP, vol. 16(2), pages 264-300, June.
    4. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    5. López-Feldman, Alejandro & Mora, Jorge & Taylor, J. Edward, 2007. "Does natural resource extraction mitigate poverty and inequality? Evidence from rural Mexico and a Lacandona Rainforest Community," Environment and Development Economics, Cambridge University Press, vol. 12(2), pages 251-269, April.
    6. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    7. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
    8. Mr. Howell H Zee, 2005. "Personal Income Tax Reform: Concepts, Issues, and Comparative Country Developments," IMF Working Papers 2005/087, International Monetary Fund.
    9. Southwick, Lawrence Jr. & Cadigan, John Jr., 1983. "The medical expense deduction and income levels: Progressive or regressive?," Journal of Economics and Business, Elsevier, vol. 35(1), pages 61-70.
    10. Oliver Hümbelin & Rudolf Farys, 2017. "Income redistribution through taxation – how deductions undermine the effect of taxes," Journal of Income Distribution, Ad libros publications inc., vol. 25(1), pages 1-35, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ada Jansen & Winile Ngobeni & Wynnona Steyn, 2023. "A reform option for pension fund contribution as tax expenditure in South Africa: A microsimulation model approach using tax administrative data," WIDER Working Paper Series wp-2023-139, World Institute for Development Economic Research (UNU-WIDER).
    2. Agustin Redonda & Christopher Axelson, 2021. "Assessing pension-related tax expenditures in South Africa: Evidence from the 2016 retirement reform," WIDER Working Paper Series wp-2021-54, World Institute for Development Economic Research (UNU-WIDER).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Babulo, Bedru & Muys, Bart & Nega, Fredu & Tollens, Eric & Nyssen, Jan & Deckers, Jozef & Mathijs, Erik, 2009. "The economic contribution of forest resource use to rural livelihoods in Tigray, Northern Ethiopia," Forest Policy and Economics, Elsevier, vol. 11(2), pages 123-131, March.
    2. Oliver Hümbelin, 2016. "Ungleichheit und Umverteilung über das Steuersystem. Eine Analyse der Verteilungseffekte von direkten Steuern und steuerlichen Abzügen mit Steuerdaten des Kantons Aargau (2001-2011)," University of Bern Social Sciences Working Papers 23, University of Bern, Department of Social Sciences.
    3. Ivica Urban, 2014. "Contributions of taxes and benefits to vertical and horizontal effects," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(3), pages 619-645, March.
    4. Kimhi, Ayal, 2010. "International Remittances, Domestic Remittances, and Income Inequality in the Dominican Republic," Discussion Papers 93130, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    5. Alejandro Lopez-Feldman, 2006. "Decomposing inequality and obtaining marginal effects," Stata Journal, StataCorp LP, vol. 6(1), pages 106-111, March.
    6. Marco Ranaldi, 2016. "On the Measurement of Functional Income Distribution," Documents de travail du Centre d'Economie de la Sorbonne 16051rrr, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Oct 2018.
    7. Marco Ranaldi, 2018. "On the Measurement of Functional Income Distribution," Post-Print halshs-01379229, HAL.
    8. Marco Ranaldi, 2022. "Income Composition Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 139-160, March.
    9. Ilpo Suoniemi & Marja Riihelä & Risto Sullström, 2008. "Tax progressivity and recent evolution of the Finnish income inequality," Working Papers 246, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    10. Ilpo Suoniemi & Juha Rantala, 2010. "Income mobility, persistent inequality and age, recent experiences from Finland," Working Papers 263, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    11. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2014. "Progressivity-Improving VAT Reforms in Italy," Working papers 6, Società Italiana di Economia Pubblica.
    12. Timm Bönke & Markus M. Grabka & Carsten Schröder & Edward N. Wolff & Lennard Zyska, 2019. "The Joint Distribution of Net Worth and Pension Wealth in Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(4), pages 834-871, December.
    13. Olivier Bargain & Tim Callan, 2010. "Analysing the effects of tax-benefit reforms on income distribution: a decomposition approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(1), pages 1-21, March.
    14. Roberto Iacono & Elisa Palagi, 2020. "Still the lands of equality? On the heterogeneity of individual factor income shares in the Nordics," LEM Papers Series 2020/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    15. Antonio Abatemarco & Massimo Aria & Sergio Beraldo & Michela Collaro, 2023. "Measuring Access and Inequality of Access to Health Care: a Policy-Oriented Decomposition," CSEF Working Papers 666, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    16. Koen Caminada & Kees Goudswaard & Chen Wang & Jinxian Wang, 2019. "Income Inequality and Fiscal Redistribution in 31 Countries After the Crisis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 119-148, March.
    17. Rashida Haq, 1999. "Income Inequality and Economic Welfare. A Decomposition Analysis for the Household Sector in Pakistan," PIDE-Working Papers 1999:170, Pakistan Institute of Development Economics.
    18. Paci, Pierella & Sasin, Martin J. & Verbeek, Jos, 2004. "Economic growth, income distribution, and poverty in Poland during transition," Policy Research Working Paper Series 3467, The World Bank.
    19. Yu Chen & Sylvie Démurger, 2014. "Pro-rural Policies, Income, and Inequality: Evaluating a Cash-for-Work Program in Rural China," Asian Economic Papers, MIT Press, vol. 13(3), pages 87-114, Fall.
    20. Sologon, Denisa Maria & Doorley, Karina & O'Donoghue, Cathal & Peluso, Eugenio, 2024. "The Gendered Nature of the Cost-of-Living Crisis in Europe," IZA Discussion Papers 16820, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Tax credit; Medical expenses; Tax deductions; Distribution; Inequality; Tax progressivity; South Africa;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:wp-2020-30. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.