TREASURER Joe Hockey denies he suggested extending the GST to health in a major tax speech on Monday but he won’t definitively rule out the option to pay for income tax cuts.
Doctors, chemists and health insurers have raised concerns at remarks he made on Monday.
Mr Hockey said he wanted an income-tax cut to compensate people when wage rises push them into higher tax brackets and left open the option of extending GST to health to pay for it.
“There’s no doubt that with the exemptions in place in relation to the GST, the GST’s base is narrowing,” Mr Hockey said.
“Particularly with the growth in the healthcare sector, which is essentially GST free,” he said.
However late Tuesday, a spokeswoman for the Treasurer denied this meant he wanted a GST on health.
“The Treasurer’s comments were in no way suggesting changing the GST-free treatment of health,” she said.
The statement, however, did not definitively rule out going ahead with such an option in the future.
The cost of seeing a doctor would rise by up to $8, medicine prices by up to $3.70 per script and health insurance would cost $45 a month more if the GST is extended to health.
Doctors, chemists and health insurers have slammed the idea of extending the GST to medical costs after Treasurer Joe Hockey appeared to float it on Monday.
Professor Brian Owler President of the AMA wants the idea of a GST on health put back in the box. Source: News Corp Australia
“There are good reasons we don’t support a GST on health because it would expose people who are sick and vulnerable,” Australian Medical Association president Dr Brian Owler said.
“We know financial barriers reduce ability to access health care, you’re less likely to see a doctor and fill scripts and have operations, and more people will turn up at public hospitals” he said.
“This idea should be put back in its box.”.
The Pharmacy Guild said it did not support the extension of the GST to medical costs or medicine.
“We know medicines and other health services are price sensitive and you would damage national health by introducing this impost,” a spokesman for the Guild said.
Private insurers are also opposed.
George Tambassis, President of Pharmacy Guild of Australia. The Guild says a GST on health would be damaging. Source: News Corp Australia
“The addition of a 10 per cent GST on health insurance premiums would create significant affordability concerns for the industry,” Private Health Care Australia’s chief Dr Michael Armitage said.
“In recent years there has been public concern about annual average premium increases around six per cent, with some people downgrading their level of cover or even dropping out completely,” he said.
“Based on that experience, a ten per cent increase would be even more challenging,” he said.
Health was exempted from the original GST because it would hit the private sector but leave public health care exempt.
The original GST legislation exempted health from the tax because it would hit the private health sector not the public health sector. Picture Thinkstock Source: Supplied
“Applying taxes to health care would place the private sector, with its heavier reliance on direct fees, at a competitive disadvantage with the public health system,” said the Howard Government’s plan for a new tax system when the GST was introduced.
The Government’s most recent Tax Expenditure statement shows it loses $3.55 billion by exempting health from the GST.
Legally a GST might only be able to be applied to private health care, not public hospitals, a situation that would likely increase demand at public hospitals.
This is because the federal government cannot tax a state government and it is state government’s that provide public hospital care and many community based health services.
There is confusion about whether the GST could apply to some health services. Picture Thinkstock Source: Supplied
There is confusion about whether a GST would apply to the $6.10 and $37.70 copayment for prescription medicines under the medicine subsidy scheme.
However, it would apply to medicine under the $37.70 general patient copayment where the government provides no subsidy, around 20 per cent of medicines are in this category.
The cost of doctors visits, 20 per cent of prescrtion medicines X-rays, blood tests, physiotherapy, health insurance and even dental visits would rise by 10 per cent if Treasurer Joe Hockey was to broaden the GST to health.
Opposition health spokeswoman Catherine King says the Opposition doesn’t support extending the GST to health.
“I think that it would be terribly regressive health policy to see the sickest and the poorest basically having to pay more and being punished for being sick,” she said