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Tax cap fight not over despite deferral

AMA President Dr Steve Hambleton has vowed to continue the fight to get the $2000 cap on tax deductions for work-related self-education expenses scrapped despite the Federal Government’s decision to defer the tax change until mid-2015.

Dr Hambleton said the Government was “wise” to delay the introduction of the cap by a year, adding that the opportunity for more comprehensive consultation would show the change was “dumb policy” that needed to be dumped.

The Government announced the deferral just two days before calling the Federal election as part of efforts to clear the political decks ahead of what is shaping as a fiercely contested ballot.

Opinion polls indicate that the Coalition is likely to win the 7 September election, but the gap in voter support between the major parties has narrowed sharply since Kevin Rudd was re-elected as Labor leader last month.

The Coalition is expected to snare the two seats being vacated by retiring independents Tony Windsor and Rob Oakeshott, and is tipped to poll strongly in New South Wales, where Labor’s image has been badly damaged by the recent ICAC investigation that recommended corruption charges be laid against former senior Labor figures Eddie Obeid and Ian Macdonald, as well as a separate Victoria Police investigation that resulted in fraud and theft charges being laid against former Labor MP Craig Thomson, who holds the central NSW coast seat of Dobell.

The Government’s decision to defer the introduction of the tax cap came as opposition to the deeply unpopular measure continued to mount.

The AMA is a founding member of the Scrap the Cap Alliance, which has swelled to encompass more than 70 professional, educational and business organisations representing in excess of 1.6 million professionals.

Advisers from Treasurer Chris Bowen’s office attended a meeting of the Alliance held at the AMA’s offices in Canberra late last month (see Treasurer gets the message: tax cap all con, no pro, p7), where they were informed of the depth of anger felt by doctors and other professionals at what was seen as a poorly-conceived, unfair and counter-productive policy.

Just three days after the meeting, Mr Bowen announced the tax cap would be deferred until 1 July 2015, slicing $250 million from the revenue the Government expected to gain from the measure.

Dr Hambleton said the Treasurer’s decision was “a big win for common sense ahead of the election”.

“The education expenses cap was a bad policy in April this year and it will still be a bad policy in July 2015 – but we now have more time to convince the next Government to scrap the cap,” he said.

The AMA President said the cap was a tax on learning and would be a major disincentive for doctors to undertake the additional education and training required to stay at the forefront of developments in medicine.

“Quality medical education is expensive, and the $2000 cap defied the reality faced by doctors wanting to improve and broaden their skills,” he said.

Dr Hambleton told the Treasurer’s advisers that the AMA accepted and supported tax changes to crack down on self-education expense claims that were not in line with community expectations.

But he warned the policy as currently framed would have far-reaching consequences for the nation’s health and economy that vastly outweighed any benefit from clawing back unjustified expense claims.

In a statement that picked up on Dr Hambleton’s comments, Mr Bowen said the deferral would “allow for further consultation on how best to target excessive claims, while ensuring the impact on university enrolments and genuine continuing professional development is minimised”.

Adrian Rollins

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