HFA opposes health tax

The Health Funds Association (HFA) is challenging Government assurances that a dedicated health tax would not lead to tax increases.

"You’ve got to question why the Government would create a ring-fenced health tax if it has no intention of raising the tax in the future," says HFA executive director Andrea Pettett.

Ring-fencing part of the existing tax take for health alone would reduce the Government’s ability to manage fiscal risk and expose health funding to economic booms and busts, Pettett says.

Finance Minister Michael Cullen was last week forced to confirm what has been an open secret in the health industry – that officials are exploring options for a health tax. Although Cullen insisted any health tax would not lead to an increase in taxes, opposition parties claim the tax is part of Labour’s "secret agenda" to raise taxes.

The HFA strongly opposes a health tax, saying overseas experience shows such taxes lead to a drop off in the up take of health insurance, resulting in more people relying on already over-burdened public health systems.

Pettett she’s please the issue is now out in the open, where it can be debated more easily.

"We believe there are more risks than benefits to a health tax, and politicians and the public have a right to know about those risks before the idea of a health tax is sold to them."

Good Returns understands the Ministry of Health and Treasury have prepared an initial report but it is not yet available.