Treasury Minister Dr Allinson launches a consultation on a proposed NHS Levy to fund health services in the Isle of Man

Tindle News

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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.

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