A draft policy that will make it mandatory for revenues from excise duty/taxes on alcohol, tobacco, and sugar-sweetened beverages (SSBs) to be channelled into health financing is underway.
The draft being prepared by the Presidential Fiscal Policy and Tax Reforms Committee is to ensure sustainable financing of the nation’s healthcare system.
Chairman of the committee, Taiwo Oyedele, made this known at a national dialogue on health financing in Abuja yesterday.
The event was attended by the Coordinating Minister of the Economy and Minister of Finance, Mr. Wale Edun, Coordinating Minister of Health and Social Welfare Prof. Muhammad Pate and Minister of Budget and Economic Planning, Senator Abubakar Bagudu.
The dialogue themed: “Reimagining the Future of Health Financing in Nigeria,’’ was convened to chart strategies for accountable and sustainable health financing
Oyedele spoke on the new tax laws, especially zero-rating of medical equipment and drugs for Value Added Tax(VAT) purposes and Carbon Tax.
He explained that the draft policy on dedicating taxes from SSBs to the health sector would soon be submitted to Pate.
“My committee is already working on a draft policy, which we’ll share with the honourable minister in due course. We think this will help us greatly,” Oyedele said.
The committee chairman, who also advocated for a carbon tax as one of the ways to boost health sector financing, explained that the proposed policy was in line with the understanding that taxpayers fund health systems.
He referred to the proposed alcohol, tobacco and sugar-sweetened beverage taxes, also known as ‘Sin tax,’ as low-hanging fruit in the country’s health sector.
“We must recognise that health is funded by taxpayers. People often talk about health being free abroad, but it is taxpayers who pay for it. Government must put in place the right policies to ensure efficiency,” Oyedele said.
He said excise duties on the three products should not be paid into the Federation Account but earmarked for healthcare delivery.
“I don’t even think we should call it sin tax, maybe lifestyle tax. Whatever we call it, those revenues should be dedicated to health outcomes. Right now, they go into the Federation Account and are shared. That, for me, is a low-hanging fruit,” Oyedele said.
He suggested that carbon tax, particularly on polluting activities such as gas flaring, should be devoted to healthcare, given the environmental and health implications of such practices.
“ Carbon Tax is really about people. If there were no human beings on this planet, nobody would care about the environment. So, if we do a carbon tax, why don’t we dedicate part of it to health financing?” Oyedele asked.
He said the zero-rating of medical equipment and drugs for VAT purposes would cut health service costs and enhance access to healthcare.
His words: “In the new tax laws, health services, medical equipment, all of that is zero-rated for VAT. This is the first time we’ve had that in our tax laws in Nigeria. And zero rating means it is better than VAT exemptions.
“What zero rating means is that when you’re selling a drug, you do not charge VAT or you charge VAT at zero percent, which is good because it is low VAT.
“But whoever produced those drugs, whatever VAT they have incurred in producing the drugs, any VAT they incurred in the process will be refunded by the government.
“This is real progress for our country. I’m not saying we are where we want to be yet, but it is progress.”
The tax reforms, according to him, also include provisions for Persons Living With Disability(PLWDs).
“We can’t leave about 15 million or about 16 million behind and claim to be inclusive. That will not be right.
“ Such persons are now also exempted from some fees, and there are other benefits for companies doing many things to support PLWDs.
“I was very pleased by the fact that our President (Bola Ahmed Tinubu) directed that the public sector should comply with the NHIA Act.
‘’We should all comply. The private sector should comply. That law has provisions for the formal sector and even the informal sector. Therefore, we should all collectively finance health.”
He added that the committee introduced tax deductions for donations to the health sector.
“What we’ve done in the new tax laws is grant tax deductions for donations in any form, in pursuit of reforming the goals of health policies. That would then encourage the private sector in particular to contribute, in addition to what is mandatory under statutory contributions.”
States must prioritise health spending, says Pate
Pate described healthcare financing as the responsibility of all levels of government and stakeholders.
He emphasised that while health financing was a shared concern, the delivery of primary healthcare remained primarily the responsibility of states and local governments.
“Federal contributions, such as the Basic Health Care Provision Fund (BHCPF), National Health Insurance Authority (NHIA), and other pooled funds, exist to support, but the core responsibility lies with states and local government reas,” Pate said.
The minister urged sub-national governments to increase health budgets and ensure full releases in line with the compact signed with the Federal Government, which recognises health as a budgetary priority.
To improve accountability, he called for the publication of health budgets, disbursements, and performance metrics.
Pate also emphasised the need to treat health as core infrastructure and a matter of national security.
“If treated with that urgency, then, the assets we build, facilities, workforce, systems are economic assets,” he noted.
Pate added that states demonstrating transparent, results-driven investments in health would set the national standard, leading to safer deliveries for mothers, healthier children, and protection for vulnerable populations against healthcare-induced poverty.
He also called on development partners to align their support with Nigeria’s national priorities and help attract foreign direct investment (FDI) into the health sector through private partnerships.
To Nigerians in the Diaspora, Pate appealed for more strategic support through the NHIA by paying health insurance premiums for relatives rather than sending emergency remittances.
Edun links economic reforms to better health financing
Edun said economic reforms under President Tinubu have paved the way for sustainable health financing and improved access to healthcare.
He stressed that prepaid and pre-planned healthcare ease the burden on households, unlike out-of-pocket spending in hospitals.
The minister said reforms such as the removal of the fuel subsidy, elimination of monetary financing, fiscal consolidation, and tax administration improvements have stabilised the economy, thereby creating room for investment in health, education, and social protection.
