New health tax on the way?

Tuesday 27 January 2015

Chief Minister Ian Gorst has dropped the strongest hint yet that a new “health tax” may be needed to help deal with the costs of the ageing population, while his Treasury Minister says not all departments have set out how they will make the 2% cuts needed to balance the books this year.

Although proposals are currently short on details, the task of setting up a funding mechanism for healthcare is placed front and centre in a new document that sets out ministers’ plans for the next three years, with ministers promising a “model” to deal with the cost of healthcare which is rising every year.

And at a press conference announcing the “Proposed Strategic Priorities 2015-2018”, Treasury Minister Alan Maclean confirmed that not all States departments have agreed how they will cut 2% from their budgets this year to make sure that the States doesn’t lurch into the red. He declined to say which departments still hadn’t completed the task set last September, but says that the money has already been removed from their cash limits.

Senator Gorst also hinted that regular efficiency savings of 1% or 2% may be set for States departments every year.

Today’s report does not cover finances or potential tax plans in detail, but at the end of the week the independent experts who advise ministers and the States are due to report on the state of the economy. The report of the Fiscal Policy Panel is expected to address the question of whether the £85 million three-year deficit that was revealed to be looming in public finances in the summer is down to a temporary blip, or because there’s a fundamental gap between the level of spending, and the level of taxation.

Separate to that is the question of how Jersey funds the rising cost of healthcare, which is growing because of the ageing population, advances in treatments and technology, and because the costs of drugs and medicine are going up.

The first of the 26 priorities set out in the plan is to “identify and implement a sustainable funding mechanism for health and social services”, and Senator Gorst touched on the subject in a Chamber of Commerce speech last week.

Yesterday he said: “We know that we have to deliver a sustainable funding mechanism for health.”

Health Minister Andrew Green added: “If you look at a graph of health expenditure, in line with all western countries, it is growing and growing. We need to make sure that we prepare for that, and that we have a model that we can afford that meets the legitimate expectations of our community.”