Recovering lost tax to meet the health financing gap for universal public sector health systems in East and Southern Africa

Abstract

IntroductionUniversal healthcare services funded through taxation and free at point-of-access are the most equitable ways of funding healthcare rights. This paper examines key public sector health financing measures in 17 East and Southern African (ESA) countries, estimates the funding gap for basic and comprehensive services and relates this to sources of lost tax revenue.MethodsHealth financing and tax data for 2018 (the most recent year available) were extracted from international databases for each ESA country, and analysed collectively for the region, comparing against intergovernmental estimates of optimal funding and tax capacity. Despite limitations noted, the scale of the health financing gap and tax losses informed policy recommendations.ResultsThe annual average per capita financing gap ranged from $28 to $84 for basic to comprehensive services, respectively, applying estimates of funding needs. Many innovative financing measures being explored do not meet this scale of deficit. Annual ESA per capita tax losses were estimated as: US$34.20 from shortfalls in domestic tax capacity and US$13.80 from illicit financial flows largely due to commercial practices. A proposed 25% minimum effective tax rate on multinationals in a fairer global tax system would yield an additional annual collection US$26.20 in the region.ConclusionsAddressing a total annual tax loss of US$34 billion from these three sources alone would almost completely finance the region’s US$36 billion financing gap for a comprehensive public sector health system. The COVID-19 pandemic’s exposure of the need for investment in public sector services suggests an opportunity for an alliance between health and finance sectors to ensure progressive taxation as the core funding for an equitable, universal health system. This implies costing the health funding demands and gap in ESA countries; strengthening domestic tax capacity, expanding wealth taxes, curbing illicit outflows and providing health evidence to ongoing African diplomacy for a fairer global tax system.