B.M.A. AND SOCIAL SECURITY

Grey River Argus, 25 February 1942, Page 7

B.M.A. AND SOCIAL SECURITY

(ißy

“Aesculapius”)

Although many doctors are now working under the latest amendment of the Social Security Act, considerable dissatisfaction exists because doctors are able to show they are not rewarded for the extra work they have to put in treating the public. And although all doctors are supposed to subscribe to “Oath of Hitppocrateis” (and most of (them do), which in effect means that the health of the patient must come first and last with medical men, doctors have 1 responsibilities. These responsibilities increase with a doctor’s ability to extend his practice, and if he does not receive a just reward for his increased effort he 1 may, find himself “in the cart” at the end of the year.

It is a, well known fact that many, I might say VERY many, doctors, unintentionally do not declare their total income in the income tax returns. They form the .habit of putting the money they receive in the form of hard cash in their pockets and forget to put it down in their books. This cash does not appear in their books and does not go through their banking account. The income tax people have no hope of tracing it. Under the Medical Benefits scheme practically the whole of their income would be known to the Commissioner of Taxes, as there would be very few if any cash transactions.

For the purpose of the Excess Profits tax incomes are assessed on the basis of the years 1937-38-39. If he had been “doing” the income tax people, the doctor would be assessed at a correspondingly low figure, and if he took on medical benefits, have to pay excess profits and also more income tax.

As I have worked it out, it might easily turn out that he was worse off under the medical benefits, even if he was making a considerably higher income. And one must always remember that he probably does not know how much he has been “doing” the Government for as he may not have kept a record. Doubt will creep into his mind whether he would be better off or not. Consultatants, of course, have more opportunity of “doing" the Government, as more of their work is for cash, this may account for the' very strong opposition of the heads of the 8.M.A., although as consultants they are not as yet included in the scheme. It is obvious, at any rate, that they have strong objections to such an idea. This is also probably the real reason why the Government offer to give the doctors their total incomes plus a fair percentage, and let them divide it up among themselves was turned down. I have calculated and compared the actual incomes in a few imaginary cases, which will give an idea of how the thing works. We will presume that the doctor has not declared his total gross income. Case 1: If he only made .the same net income under the medical benefits he would obviously be worse off as he would have to pay income tax on his true income and also probably excess profits on the amount he had under-declared his income. Case 2: He had declared a net income of £lOOO. Then his actual income after deducting income tax and Social Security tax would be £765. Now if he came into the medical benefits and his net income rose to £l5OO (it would all be declared, there would be very little he could avoid declaring), after deducting income tax and social security tax he would be left with £lO9O. Excess profits tax on £325 would be £195, leaving actual income £895. or £l3O more than his income before. So if he had not declared £l3O of his previous income he would be where he was, and if he had not declared more, then he would be worse off. Probably on a

declared income of £lOOO net he could easily have got away with a good deal more than £l3O. Case 3: Previously he had declared the same net income, £lOOO. But under medical benefits he made £2OOO (quite a reasonable case). Then his actual income would work out at £lOl2 10s, a difference of £247 10s

So it appears that if a doctor was not declaring all his income, he would have to make much more under the medical benefits to gain any advantage, and he might easily be worse off.

The B M.A. have certainly been making a lot of the excess profit tax. If the Government declared that the excess profit tax did not app y . earnings in the medical P™ more doctors might come into th scheme, but at the same time the tax should not apply to any other section of the community, wno by their own efforts, increase then income by fifty or one hundred per cent. This should include farmers, watersiders, miners, etc., whose incomes have materially increased since the Excess Profits came into existence..

Summed up, the doctors may have an argument for- increased pay tor increased work, but if the increase is granted on the one hand, then i must be granted on the other, and everyone who increases his income by individual effort should be entitled to the increase if anyone else is. I produce two cases in which doctors, although they may have doubled their income by increased labour are little, if any, better off.

CASE 1. £ Net income declared 1000 Income tax icA Social Security tax lUU Actual income I™ Under Medical Benefits Net income 1500 Income tax Social Security tax 15U Income left 1090 Excess profits £325; 60% .... 195 Actual income 895 Difference £l3O (Here a doctor gets about onequarter of his increased earningsi). CASE 2. £ Net income declared 1000 Income tax 135 Social Security tax 100 Actual income 765 Under Medical Benefits £ s. Net income ' 2000 Income tax 416 5 Social Security tax 200 Income left 1383 15 Excess profits £6lB 15s, 60 per cent 317 5 Actual income 1012 10 Difference 247 10 (Here a doctor gets less than onequarter of his increased earned income. Apply this to miners and watersiders and you will have trouble). Now while the two cases show that the doctor may have twice the amount of work to do under the Social Security Scheme than formerly, and through the “Excess Profits Tax” he is very little better off, they also show that even in war time with probably the highest taxation in the world, he 'is not doing much harm, and that in peace time he would be doing very well. Anyhow the war is coming closer to us, and all of us, doctors included, may have to extend our war effort shortly.