Treasury Minister Dr Allinson launches a consultation on a proposed NHS Levy to fund health services in the Isle of Man
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00:00Well, we're here with Treasury Minister Dr Alex Allanson and we're talking about the
00:07consultation launch today into a new NHS levy. Alex, perhaps you can explain the rationale
00:15for the levy.
00:16Certainly, this is something that I brought up in last year's budget. We've been very
00:22aware that the NHS has needed more and more resources over the last decade. There are
00:28obviously some structural changes that need to be done so it delivers for the people of
00:31the Isle of Man. But from a Treasury perspective, we're also looking at how we can fund the
00:36NHS free at the point of need for people on the Isle of Man going forward. Now, last year
00:41we put income tax up, but what I said is I was looking at different ways of raising that
00:46extra revenue that needs to go into healthcare. And so rather than an income tax, was there
00:51other ways that we could take a levy or a tax on income that would encompass more people
00:56who currently don't pay necessarily towards the NHS. And that's what the consultation
01:00is about, to actually see if people are willing to consider extra ways of paying for the NHS
01:06above and beyond national insurance and the income tax, which was brought down from 22%
01:10to 21% in this year's budget.
01:13This is a tax proposed on income. Wouldn't it have been simpler just actually to increase
01:22income tax?
01:23That's what we did last year, and increasing income tax is relatively straightforward as
01:27long as Timbald agrees to it, but it doesn't encompass certain people's incomes. So particularly
01:33when we look, and the consultation deals with people who may earn incomes in other countries
01:39and through double taxation agreements, not pay tax here, but pay tax in the other countries.
01:44That's still income, but isn't encompassed within our system. And there are other things
01:48such as pension lump sums, other payments that currently aren't taxed through income
01:55tax, or there are various thresholds or various allocations that you can claim. So it's looking
02:01in the round how we can claim more from people's income to pay directly through the NHS through
02:08a ring-fenced levy. Now, I'm interested in the results of this consultation because previously
02:14when we've asked people about paying for the NHS, people are quite prepared to pay more tax,
02:20but we saw certainly some apprehension about that last year when we put income tax up.
02:25There was certainly a political imperative to start bringing it down, but looking at other
02:30ways of paying for the NHS and other ways of putting more resources into those frontline
02:34services.
02:35I think people would probably accept the argument on income that's subject to double taxation
02:42or pension lump sums, but you're also talking about things like social security benefits,
02:47things like income support that are not currently subject to taxation. Now, that's a hard sell, isn't it?
02:53Well, that's why we're consulting, because certain benefits are taxed. For instance,
02:59pensions are taxed, child benefit is taxed, but you're quite right, others aren't. There are
03:03certain earnings replacement benefits, income support, employed persons allowance, which
03:10currently aren't taxed should they have a levy, and we're talking about a 2% levy. Should they have
03:15a 2% levy on them because those people are still using the NHS? And so that's why we're going out
03:21for consultation to see what the public appetite is for these changes. Now, I'm coming at it from
03:27a treasury perspective and absolutely making sure that we put the right resources into our NHS,
03:32making absolutely sure that we've got the right governance around the NHS so we can actually
03:38provide the services to the people who need it. And obviously we've got other Timwell debates coming
03:42up this year about the structure of our health service, but key to that is the assumption
03:48that we have the right amount of money going into in the first place and that we get that from as
03:53many sources as possible in a fair and equitable way. Isn't this a regressive taxation in that,
04:00you know, talking about tax cap for the very wealthy, but at the same time you're talking
04:06about taxing benefits. Now, I take the point there's going to be a threshold, there may well be
04:12people who, only a few people on benefits that aren't caught up in the net, but isn't that
04:18regressive taxation, a taxation that disproportionately affects those on lower
04:25incomes as opposed to those on higher income? That's why we're doing the consultation, so
04:29we have not made any decisions, we're going out with all the different options in terms of a tax
04:35on income as opposed to national insurance, which is very much a tax on working people. We have looked
04:40again at people on a tax cap and levying the NHS levy on them above and beyond the income tax
04:48and also one of the questions is whether the amount you pay in terms of the levy
04:52should be capped to £5,000 or £10,000 for jointly assessed couples, whether we should look at
04:58jointly assessed couples and apply the same restrictions in terms of taxation that they get
05:03through income tax with the levy. So everything is on the table here, genuinely what I'm looking for
05:08is a steer from the people of the Isle of Man in terms of what they think is appropriate in terms
05:13of paying for the NHS that everyone will use at some point in their lives. Why should there be a
05:19tax cap or a cap on the levy at all? I don't know what the average age of a tax capper is but I'm
05:26assuming they are probably slightly older, maybe not in the need of health service now but probably
05:33more imminently in need of health services, so shouldn't they be paying? Why should there be a tax
05:38cap on the levy at all? Well that's one of the questions. I don't know who tax cappers are
05:44either because that's obviously personal taxation information that I'm not privy to.
05:49Well I know that we have some entrepreneurs who come over here who may be younger so
05:54I don't think we can stereotype those small number of people, it's less than 70 who currently
05:59apply and get the tax cap. One of the questions is should the levy be capped and I'm interested in
06:04the response to that because theoretically the levy wouldn't have to be capped
06:09and so we could charge a NHS levy on somebody's complete income irrespective of the tax cap.
06:16In terms of the regressive nature of this, one of the other questions we're asking about
06:20is threshold, should this threshold be the same as income tax or should it actually be higher and so
06:25what we're trying to do is make sure that we have a progressive way of actually getting the
06:31extra income we need to ring fence for the NHS coming forward. Have you done the sums? I mean
06:38based on two percent, based on a threshold similar in value to the personal allowance, do you know
06:45how many people on benefit would get caught up in the net? In terms of those people on benefit
06:50we haven't done that exact calculation. We know that most people on benefits would probably be
06:56below the upper 21% tax threshold but they would still be encompassed by the 10% threshold
07:06so if we set this the same as income tax I think very few people would be subject to an NHS levy.
07:13However there will be some people, particularly on some of the earnings
07:16replacement benefits, who may have some of their income taken up with this and again
07:21these are not decisions made, this is a consultation to see in our community what people
07:28think is fair because everyone at some point in their life will use the NHS, even those people
07:33with private health insurance, the NHS is there for emergencies and I think it's very important
07:38that everyone pays their fair share but that is actually seen to be fair and judged to be
07:43fair by our whole community. So what's the next step? Do you have a consultation that lasts for
07:49how long? The consultation lasts until the 18th of June and so we're given plenty of time for people
07:54to put in their ideas. We will then be analysing the results and publishing those and hopefully
08:00those will lead to the actual policies that we take forward through Timbald in the future.
08:07If we do end up going ahead with an NHS levy I think you made the very valid point that if we
08:13don't do this we're still relying on income tax and also national insurance as being the real
08:20main areas of funding to the NHS. Obviously there are various fees and charges such as
08:24prescription fees and dental fees and opticians fees that come in as well but the key income for
08:32our NHS is through income tax and I think if we're going to try to control that we need to
08:37control the spending in the NHS, control government spending in total but we've also seen that NHS
08:43spending outstrips economic growth and outstrips inflation year on year. We've got a funding
08:48formula for our NHS which is above inflation and so we absolutely need to make sure that we have
08:53enough resources to fund a properly delivering NHS for our people. Aspects of this will be a hard
08:59sell in Timbald if you did go ahead with charging people on benefit. I think again the proposal or
09:09the question about whether we should have taxes on benefits, whether we should look at those people
09:15on benefits who are earning on top of the benefits, should it be subject to a levy is up for
09:22discussion. I've made no clear decisions about that. I'm absolutely certain that we need our
09:27benefit system. We have pledged to increase that in line with at least with inflation and have
09:32delivered that in this year's budget together with above inflation rate rises for some benefits
09:38and also introducing different thresholds for things like child benefit. So I think we are doing
09:43the right thing by those poor and vulnerable people in our society but also we need to look
09:48in the whole of how we fund our health service going into the future so that we can also provide
09:54a high quality health care system for all those people whether they're on benefits or not.
09:59And what's to stop this charge just increasing year on year? We've had introduced other charges
10:05in the past. I'm thinking of the sewerage rate for instance. What's to stop this just increasing
10:12more and more and more each year? I think key to that is the other efforts we're doing in terms of
10:18controlling health care spending. So the health minister announced a new mandate that's really
10:26looking at putting more money into prevention, more money into primary care, making sure people
10:32can see a doctor, a GP, a dentist close to where they live and trying to stop people getting that
10:38ill that they need to go into a nobles hospital because most of the costs of our NHS are soaked
10:43up by secondary care particularly for emergency care, cancer treatments, those sort of things.
10:48If we can do more preventive work, if we can put more money into primary care, we can control the
10:54health care costs and so control the spending that's done by the department and therefore
10:59reduce that ever-increasing need for more and more money when people aren't necessarily seeing the
11:04benefits of that for themselves or their families. Dr. Anderson, thank you very much. Thank you.