Tax incentives promoted

The Health Funds Association says the introduction of tax incentives for private health insurance would help bolster the public health service in New Zealand.

A report, written by the New Zealand Institute of Economic Research for the association, concludes that tax incentives would pass the national welfare cost-benefit test. It argues that under such a scheme more would be invested in the health sector, than the money forgone in tax revenue.

It also says the incentives could target lower income households.

NZIER's Alex Sundakov says two things came out of the research once it started. The first is that tax incentives where a better option for promoting the uptake of private health insurance, as opposed to changing the fringe benefit tax treatment of premiums.

This is because not everybody is in the work force.

Secondly the issue was as much about health policy, as it is about tax policy.

The idea of incentives has received muted response from politicians.

Tax incentives for health insurance aren't on the government's work schedule, nor is it doing any work on the subject, a spokesperson for Finance Minister Michael Cullen says.

National's former health and revenue minister Wyatt Creech says National is doing a complete review of its policies.

He says the report provides a "serious intellectual base" for the party to use in its policy making.

If tax incentives for health insurance provide a "net public benefit, then it's worth looking at," he says.

Labour's coalition partner, The Alliance, has a totally different position.

List MP Philidda Bunkle says the party is totally opposed tax incentive for private health insurance.

She argues under such a regime the public health system gets run down and the cost for health is carried more heavily by the lower socio-economic groups than higher ones.

HFA executive director Andrea Pettett is realistic about the political reaction: "Achieving tax reform isn't going to happen overnight, and it won't," she says.

This is the association's first piece of major work and it will continue pursuing the subject, she says.

You can read Philip's blog here: http://www.goodreturns.co.nz/blog/

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