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‘Extreme’ GST on health makes no sense

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The sickest and most vulnerable in society would be hit hardest if the Federal Government moved to impose a consumption tax on health care, AMA President Professor Brian Owler has warned.

The Turnbull Government has initiated a wide-ranging discussion on tax reform that has included suggestions the Goods and Services Tax be raised to 15 per cent or be expanded to include health care, education and fresh food.

Treasurer Scott Morrison has sought to distance the Government from what he has described as more “extreme” proposals, and it has been reported that health and education will remain exempt because of complexities in applying the indirect tax to these services.

But Professor Owler said it was nonetheless important to discuss why health should remain GST-exempt.

He said imposing a consumption tax on health would have a “very significant impact” on the cost of health care, particularly for the most unwell and chronically ill.

Consumption taxes, because they apply across the board, are seen as inherently regressive, and Professor Owler said that was particularly the case when they were applied to health.

“It doesn’t get much more regressive [than] when it comes to health care, because this is going to be a tax on the sickest, most unwell people in our society; those who can least afford to pay a significant increase in health care costs,” he said.

Professor Owler said Australian patients already paid among the highest out-of-pocket costs in the world for their health care, and adding a GST would exacerbate the situation, to the particular detriment of the poorest and sickest.

It has been suggested that the impact of a GST on health could be offset by compensation payments, but Professor Owler questioned the practicality of the idea, particularly in directing it to those who most need it.

He said if fresh food was to be kept GST-exempt, so should health care: “We are talking about excluding fresh food, presumably because we want to preserve people’s health. So it makes no sense, then, to apply the GST to health care when people are actually sick and when they can least afford it”.

Adrian Rollins