Recent research from the Australia Institute (AI) has outlined how over $2 billion could be pumped back into the Australian economy, if general sales tax (GST) was tacked onto private health insurance.
As part of a wider report which focuses on ways to decrease the budget deficit without being hard-hitting to low income families, AI notes that there could be benefits in extending GST to two key sectors – private health insurance and private schools.
As reported by the Guardian, the objections to such taxes in the past have been that such a policy would prove to be regressive. Rather than bringing down the cost of living for low income Australian families, they would actively be priced out of essentials – like health insurance – that the private sector can offer.
Moreover, the government would likely solve more problems and garner better public opinion if spending was cut and taxes not increased.
AI report that 'the government is spending more money than it receives in revenue.' Hardly a revelation, but still a huge nationwide issue that needs to be addressed.
According to the statistics, GST could raise around $1.53 billion from the private health insurance industry alone. While criticism is likely to be widespread, AI argues that any introduction of GST could be balanced in efforts to only affect high-earners – those who can ultimately afford it.
However, the addition of GST is likely to price-out even mid-level income families across Australia.
"The majority of Australians who have private health cover are on average incomes. About 3.4 million of them have household incomes of less than $35,000 and another 5.6 million have incomes under $50,000," explained HICA Director Jethro Still.
Ultimately, the impact that added taxation could have on the majority of those trying to protect their health is likely to outweigh any positives that the research claims the scheme can provide.
Plugging the revenue hole
"As the revenue base in Australia is continually downgraded, the government needs to find ways of increasing revenue. The budget has a revenue problem and broadening the GST to private health insurance [could be] a first step towards plugging the revenue hole," concludes the research from AI.
The proposal is still very much at the conceptual stage, and it remains to be seen whether the government would ultimately put a tax into place that so many are likely to object to.
Regardless of any increases in tax, private health insurance remains the most complete way to ensure that you receive only the best treatment, if and when it's needed. Whether you are looking to take out, renew or upgrade a policy, call HICA on 1300 44 22 01 for expert, impartial advice.