Warning on health insurance tax

Press, 30 May 1985, Page 4

Warning on health insurance tax

PA Wellington Chambers of Commerce warned yesterday that removal of tax rebates on private health schemes would hit middle-income earners hardest. The chambers' president, Mr Jack Hazlett, said last evening that private health insurance schemes had sprung out of the inability of the public sector to provide a service required by the community. “Any move to remove their tax-deductibility would affect the middle-income group more than any other,” he said. Mr Hazlett was replying to the Minister of Health, Dr Bassett, who was reported yesterday as saying he expected the health system to benefit if tax rebates on private health insurance schemes were abolished. Mr Hazlett said middleincome earners were one of the groups the Government had said it wanted to help. “Second, this is going to move back into the public sector a greater proportion of the expenditure of the gross domestic product of the country,” he said. “In fact, the private sector is providing what is obviously a wanted service

by the community at large.” Mr Hazlett said he did not see the move as a direct tax grab but saw it as a disincentive for the private sector to provide services which it could adequately perform. The premiums were able to be claimed for deduction, together with superannuation and personal insurance, up to the exemption maximum of $l2OO. Mr Hazlett said he was delighted to see the Associate Minister of Finance, Mr Caygill, responding very positively on the issue of private superannuation schemes. The research director of the Employers’ Federation, Mr Bill Poole, has warned that the Government might be about to remove private superannuation scheme tax exemption provisions. The claim was promptly denied by Mr Caygill. Mr Hazlett said Mr Caygill had indicated a preparedness to be ready to change position and to listen to informed opinion before any policy was set out. “I hope Dr Bassett would accord the same facility in respect to the movement on the non-deductibility of health payments,” he said.

Mr Caygill's comments indicated the removal of superannuation scheme tax exemption provisions was not a foregone conclusion. Mr Hazlett said. “From the chambers’ point of view we hope that we will have the opportunity to work with Mr Caygill and his advisers and to make submissions that will cause him perhaps to change his mind if that was their intention,” he said. Dr Bassett was reported on Tuesday as saying that rebates for private health insurance premiums totalled between $7 million and $lO million. He said he would demand that any money saved be directed to public health, first to primary health care and second to public hospitals to help reduce waiting times at three or four big hospitals. Asked what reaction he would expect from private health funds, Dr Bassett said he had had no discussions with the administrators of the funds because the question was hypothetical until the results of the Government’s tax study were known. Dr Bassett estimated average family health insurance premiums at between $235 and $250 a year.