HILARY JOFFE: As the Covid crisis rages, to talk about a vaccine tax is ludicrous

As accounting firms and economists start to come out with budget previews, there is much debate about whether the government will introduce a tax to fund SA's Covid vaccine programme, and whether it should. This is an absurd debate, fuelled by a dysfunctional government. It is absurd that there should even be a question about whether the government can afford a vaccine programme; absurd, too, that it would consider a new tax to pay for it.

That is, first, because the macroeconomic case for it to spend more, and if necessary borrow more, to fund the vaccine is absolutely compelling. There is no world in which a vaccine programme doesn't pay for itself many times over, in terms of both growth and tax revenue. Without vaccines, SA faces further waves of infection and repeated economic shutdowns, as well as a fear factor that weighs on consumers' and investors' willingness to spend. With an effective vaccine programme the economy can reopen and confidence be regained.

Leading economists put a fiscal multiplier of at least six to state spending on a vaccine programme that would halt transmission of the virus. Some put it as high as 10 times. In other words, each rand the government spends on the programme adds at least R6-R10 to the GDP; and that rand is also estimated to add well over R5 to tax revenue. These calculations are based on the R20.6bn cost that health minister Zweli Mkhize placed on the programme, which aims to reach enough people to achieve herd immunity. But the multiplier is even greater if the cost comes in lower.

Business for SA now estimates the programme should cost just R12bn. That's based on the latest pricing by the vaccine manufacturers, as well as on updated estimates of the cost of distributing and administering the vaccine and on the likely uptake of no more than 70%-80%. And even if SA were to pay higher prices to roll out the programme faster, it still doesn't change the economics much. And with the medical schemes in for up to R4.5bn to pay for vaccines for their own members, as well as cross-subsidise non-members, the government's vaccine bill should be well below R12bn - if it can control corruption and rent-seeking.

Finding the cash should be no problem for a government that is, unexpectedly, rolling in it. This is a second reason the debate about a vaccine tax is absurd right now. State cash resources peaked at R230bn last month and Intellidex economist Peter Attard Montalto projects they will end the fiscal year at R283bn - double what the Treasury budgeted for in the October midterm budget statement. That reflects the fact that the Treasury has been raising much more cash than expected at its weekly bond auctions, as well as a commodity price windfall that has boosted tax collections.

It hardly needs to be said that the economics of the vaccine are compelling in human terms, too, with the statistics suggesting that well over 100,000 South Africans have died of Covid.

There's been much talk of social solidarity in the funding of the vaccine, but those in the private sector who can afford to contribute would likely choose the transparent and well-governed Solidarity Fund over a government tax. Private individuals and companies are already in effect being taxed to fund the programme through their medical schemes, and where corporations such as mining companies provide vaccinations for employees and local communities. The economics are compelling for them too - medical scheme members, or miners, can be safe only if everyone is safe.

For the government, though, the return on this investment, for the fiscus and for the country, would be far better than on much of its other spending. We shouldn't be having this debate.

• Joffe is contributing editor.