The Association of British Insurers (ABI) has said “enough is enough” and urged government to start the discussion about cutting Insurance Premium Tax (IPT) on private medical insurance (PMI).
While stopping short of calling for the abolition of Jakob Strandgaard, policy adviser health and protection at the ABI, highlighted that IPT brought in more money into the exchequer than tobacco and beer duty combined.
Strandgaard kicked off the first day of Health & Protection’s Health Summit at Tylney Hall today ahead of the chancellor’s Budget speech.
Commenting on the ABI’s recent call to cut IPT, Strandgaard told delegates it was “very, very important” to start to talk about why such a cut would be benefit people, business and society.
“The IPT on health insurance has brought in £6.8bn in the last financial year. It’s more than tobacco and beer duty combined. Enough is enough, let’s say that,” Strandgaard continued.
“When we call for a cut, it’s not just a tax cut for the sake of it but because it would incentivise uptake [of PMI] which would have some very beneficial effects.
“Ill health and the lost output connected to the workforce right now is estimated to cost society £150bn a year which is 7% of GDP, which is a staggeringly high figure.
“If you can tap into anything that can reduce that, any government – Labour or Conservative – would agree that that’s something we should work towards.”
Asked by an audience member why the ABI was advocating a cut and not an abolition of IPT for PMI, Strangaard said: “We have to be realistic. Let’s see what they do shortly, but it’s certainly a point well made.
“It doesn’t seem fair that they have increased that rate so much so many times compared with other taxes.
“Normally you use the tax instrument to cover some expenditure but you should use it to disincentivise some behaviour you don’t like and the uptake of health insurance is something you should incentivise, so from that point of view, it just doesn’t make sense.”
PMI tax breaks have been called for by the likes of the Axa Health, ABI, AMII, Aviva, BIBA, Bupa and the CBI in the run up to the Budget.
