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Health tax idea canned

Concerns within the health insurance industry that the government was considering a health tax appear to have abated.

Sunday, July 6th 2003, 9:26PM

by Rob Hosking

Health minister Annette King first floated the idea of a separate health tax during one of the many nurses pay disputes two years ago. Both King and Finance Minister Michael Cullen gave assurances that any such tax would not raise additional revenue: rather, it would simply split off the amount of money raised in taxes that goes into health.

The health insurance industry has vehemently opposed the idea. The big concern was that New Zealand would see a similar shift in behaviour to that which followed the introduction of Medicare in Australia - people would think the state sector had their health needs covered, and thus cancel their health insurance.

Cullen two weeks ago canvassed the long term trends around health spending, and described the demographics as “frightening”.

Long term funding of health was the most difficult issue he faced, he said - and, very unusually for Cullen, he admitted he didn’t have the answers.

However that speech was not a softening up move for a health tax. While a joint working group of officials from the Treasury and the Ministry of Health has been working on options for future health funding, including a health tax, Cullen’s office now says the issue is “on the back burner”.

It is understood Cullen has gone further privately, telling some groups that the health tax is completely off the agenda.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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