Health insurance: Insurers seek tax break to lower costs for employer-provided health cover
For example, someone with private health insurance might be able to access healthcare more frequently, enabling them to nip health problems in the bud.
They could also be treated for an ailment sooner, enabling them to be more productive and get back to work more quickly.
Wider insurance coverage could also take strain off the public healthcare system.
Hope makes his case as the Government outsources more work to private healthcare providers.
The call also comes as the Inland Revenue Department (IRD) reviews FBT settings to try to make them simpler and fairer.
However, Revenue Minister Simon Watts does not appear particularly hot on the idea.
Asked whether he had a view on the pitch, or whether he would consider it, Watts said: 'The proposal isn't part of the Government's work programme at this point.'
Indeed, the IRD did not mention exempting insurance in an issues paper on FBT it released in April.
Rather, it explained it doesn't currently qualify as a 'health and safety' exemption, as flu vaccine vouchers do, because health insurance doesn't relate to a specific health and safety risk in the workplace.
Consultant accountant Geof Nightingale said this wasn't the first time he had heard calls for insurance to be exempt from the FBT.
He said the idea was generally discarded because of its cost to the Crown.
Nightingale believed it would be easier to make the case from a health policy perspective than from a tax perspective.
Deloitte partner Robyn Walker noted the threshold for tax exemptions were generally high to avoid 'slippery slope' situations – an exemption for one thing driving calls for further exemptions.
Walker also questioned whether the exemption would end up benefiting white collar workers the most, whose employers might be more prepared to pay for insurance.
Hope had a different view.
He argued that if large employers of low-paid workers didn't have to pay tax on top of insurance premiums, they would be more inclined to offer employees cover.
According to the results of a new Financial Services Council survey, 78% of people with life insurance and 56% with health insurance pay for it entirely out of their own pockets.
Affordability is the key issue, with health and life insurance premiums rising at a rate well above the inflation rate.
Jenée Tibshraeny is the Herald's Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NZ Herald
21 hours ago
- NZ Herald
Northland homelessness crisis: Calls for urgent Government action
Northland social services and housing providers have called on the Government to urgently address rising homelessness in the region. The Ministry of Housing and Urban Development's latest Homelessness Insights Report shows the number of people living without shelter has increased across the country. Apart from Auckland, the Far
NZ Herald
a day ago
- NZ Herald
Letters: We shouldn't rush NCEA education reforms
It seems that this discussion is only just getting started, and if the Government truly wants a better system, it must listen to all those affected, not just industry leaders. If we really want a better system, proper consultation is needed, not yet another flawed scheme for teachers and students to grapple with. Vivien Fergusson, Mt Eden. Putting faith in AI After listening to Erica Stanford: AI marking will save money clearly but, having been on a marking panel, teachers learn valuable skills by marking that cannot be learned any other way. Also, student misconceptions abound. AI marking will save teachers from the internal marking. So what do they have left? Mock exams and homework? Learning is the key now, not understanding. One just needs to be able to say the right phrase. After all, AI has to mark it. I suppose the devil is in the fine print. Looks like we need to start teaching our grandchildren times tables again. It is as if we are back in the 1990s: Academic and non-academic pupils. Bright and dumb. The neurodiverse have just been sold out? We need to climb up the international rankings just to look good - a political stunt. Steve Russell, Hillcrest. Humans and the health system In 1999, a landmark report on patient safety in the American healthcare system was published. Its abbreviated title was 'To Err is Human'. The burden of that report was that human error occurs throughout the healthcare system and has patient safety consequences. The answer is not to blame the humans involved but to design a system that makes such errors less likely. A case in point is the recent instance reported in the Herald of a series of errors in the dispensing of the adult dosage of a medication to a baby. It might seem surprising that this could happen passing through the hands of three different people, but one wonders about the underlying system. In a properly designed electronic system for prescribing and dispensing medications, an entry of an adult dosage against a baby's identification should automatically generate a red flag. This would be a fail-safe. We should be paying more attention to enhancing the digital capabilities of our health system with inbuilt checks to make such instances of human error less likely. Peter Davis, Emeritus Professor, University of Auckland. Milk it for all it's worth A spoof announcement from the Ministry of Crypto-Dairy Affairs (MoCDA): In response to spiralling global butter prices — and the unwavering Kiwi passion for innovation — we proudly unveil ButterCoin, New Zealand's first dairy-backed digital currency. Finally, a coin as smooth as our export spreads. Key features of ButterCoin: Temperature-Sensitive Risk Protocol: Market stability will now hinge entirely on keeping things chilled. Once the market curdles, spreading risk becomes as futile as warm toast. Powered by ByreChain: Our revolutionary blockchain — or 'cowchain' — technology tracks every pat of ButterCoin from pasture to portfolio. Moo-ve over Bitcoin. Trading floor renamed The Churn: Investors will churn out profits daily, provided they don't get skimmed in the process. Elite trader upgrade – CreamCoin: High-volume dairy tycoons will be granted CreamCoin status, giving them exclusive access to the VIP Milking Lounge and first dibs on pasturefront NFTs. MoCDA Statement: 'This currency isn't just dairy-driven — it's full-fat financial futurism. Finally, a way to milk economic volatility for every drop.' Coming soon: Our launch event, Crypto & Cows, featuring live blockchain branding and a butter sculpture of Satoshi Nakamoo-to. Ready to churn your future into riches? Let's whip this market! Paul Coyle, Browns Bay. Names and passports In regards to the editorial last week (July 30) and the name on our passports, the passport is a legal document. 'Aotearoa' is not yet officially or legally a name for New Zealand. Therefore, it should not have the prominent position. The country's official name must take precedence. This is not to say that 'Aotearoa' should not be on the cover. Maybe we could have 'Nu Turani' on the passport, as this was the name used in the Māori version of the Treaty of Waitangi, or Nu Tīreni, which was used in the Declaration of Independence in 1835. Ian McGovern, Kerikeri.
Newsroom
2 days ago
- Newsroom
Making heated tobacco products cheaper than cigarettes is no scandal
Opinion: The Government's decision to introduce a lower excise rate for heated tobacco products (HTPs) has been widely framed as 'giving tax breaks to tobacco companies'. It's a provocative line – and politically potent – but it doesn't help us have an honest, evidence-informed discussion about how to reduce smoking harm, particularly for the most disadvantaged New Zealanders, or how to deal with conflicts of interest. Let's be clear: this isn't a corporate subsidy, so long as the reduced tax is passed on with cheaper products. It's an excise adjustment applied to a class of tobacco products that heat rather than burn tobacco. (Like vaping products, HTPs are marketed as smoke-free alternatives to cigarettes, but are not the same thing.) Combustion is what makes smoking lethal. Cigarettes burn at over 800C, releasing thousands of toxic compounds. Heated tobacco products operate at much lower temperatures and don't produce smoke – just an aerosol – with far fewer harmful constituents. That distinction matters. The multinational tobacco company Philip Morris does hold a monopoly over HTPs in New Zealand. That's not ideal, but it doesn't mean the tax policy exists for Philip Morris International. The intention is to make a less harmful product more affordable than cigarettes – a principle long accepted in tobacco harm reduction, and already applied to vaping. Unfortunately, it appears Philip Morris International hasn't yet passed on the tax savings to the small number of HTP users in New Zealand – this is the real scandal. In addition, the apparent impact of PMI on government policy is tough to ignore, and contrary to the WHO Framework Convention on Tobacco Control, which seeks to protect government policy from tobacco industry influence. New Zealand has rightly taxed cigarettes heavily to deter use. But excise taxes are also regressive. The remaining people who smoke – fewer than 7 percent of adults – are disproportionately Māori, Pasifika, low-income, and more likely to experience mental health distress. The associate minister of health, Casey Costello, justified the excise differential by citing relative harm reduction and the growing inequity of uniform excise. Her reasoning deserves more attention than it has been given. Critics argue there's insufficient evidence that HTPs help people quit, but the UK Office for Health Improvement and Disabilities, the UK Committee on Toxicity, and the US Food and Drug Administration all acknowledge HTPs reduce exposure to toxicants compared with cigarettes. That doesn't make them harmless – but being less harmful than smoking is enough to warrant a differential tax. The example of Japan is instructive. There, HTPs make up over 30 percent of tobacco sales. Though vaping is banned, cigarette consumption has plummeted by 40 percent in some markets. Surveys suggest many smokers switched completely to HTPs. Youth uptake has been minimal. No policy is perfect, but that's a shift in the right direction. What's really at stake here? Not a tax break for big tobacco – but increasing the options for people who smoke and want to quit, and whether we believe in a response to nicotine products based on their comparative risks to human health as a foundation for public health policy. A more productive debate would ask: • Are they less harmful than cigarettes, and do they help smokers quit? • Are tax savings being passed on to consumers? • Are HTPs being promoted responsibly? • Will there be an independent evaluation of their impact on smoking rates? In a country that leads the world with its Smokefree 2025 goal, we should be asking how to accelerate the decline in smoking, not defending a one-size-fits-all excise regime that's increasingly disconnected from the realities of risk, behaviour, and equity. If HTPs can help some people switch, pricing them appropriately is not a scandal. It's a good policy – provided it's transparent, monitored, and grounded in evidence, and the tax savings are passed on to consumers.
