Health tax slips into public view

By VERNON SMALL deputy political editor

Labour has been forced to reveal its plan to investigate a specific health tax after a slip by senior whip Rick Barker.

The Tukituki MP let the cat out of the bag at a Grey Power meeting in Havelock North yesterday, four days before Finance Minister Michael Cullen had planned to say anything about it.

That forced Dr Cullen to issue a statement saying Labour was not committed to a dedicated health tax but would explore its feasibility.

He rejected Act and National claims that it would be an extra tax of 8 per cent.

"Even if we did decide to proceed, we have not discussed a specific rate."

The rate would be irrelevant because the health tax would replace an equivalent amount of existing income tax. "It would not be imposed as new taxation."

Dr Cullen said that, in the long run, a dedicated tax might encourage debate about what the health service should deliver and how to pay for it.

"This is not some kind of stealth tax, or some kind of hidden agenda."

It would be at least April 2005 before it could be established.

After the Grey Power meeting, Mr Barker admitted he had jumped the gun.

The dedicated fund could increase if people were prepared to see a bigger slice of their taxes go on health spending, Mr Barker said.

National leader Bill English said a dedicated tax would breach Labour's pledge card promise not to increase income tax, company tax or GST.

"The only reason you ring-fence a tax is so you can increase it."

National MP Annabel Young has called on Labour to tell voters if it would lift the tax rate tax on petrol, alcohol and tobacco.

They should also be told if death taxes would be brought back.

Dr Cullen said there was "no pressure to increase petrol taxes" because all the roading projects announced by Transfund would be paid for by the 4.7 per cent increase last March.

He ruled out death taxes, saying Ms Young was "shroud waving".

But he was silent on whether Labour would increase the duty on tobacco and alcohol, which are indexed to inflation.

Ms Young said National would increase the excise on alcohol and tobacco in line with the rate of inflation, but would repeal the March increase in petrol tax.

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