“Tax is there to encourage people to behave a certain way.” That is what I’ve learnt from Rich Dad Poor Dad concept (Tax-free wealth).
There are currently tax breaks available that encourage people to make healthier lifestyle choices. Here are some tax breaks that government uses to incentives people to live a healthier lifestyle.
Tax incentives related to health for employees and company directors
Cycle to work scheme
If you have a business and employ people, you can use the shame to give your employees bicycle vouchers tax-free for them to cycle to work, instead of using public transport. In this way, you can encourage them being more active, so they can be more productive at work and help boost the business profitability.
On-site gym or health programmes for employees
Similarly, if you invest in health facilities in your workplace, or hire fitness instructors for your employees to help boost their well-being and productivity, those are effectively part of your payroll costs (employee welfare), so that those are tax-deductible for your businesses. For employees, such on-site fitness facilities that are accessible for all employees are tax-free benefit.
However, you may also provide other benefits such as usual gym membership, health insurance, etc, those are taxable benefit for your employees.
Glasses/Contact Lenses/Eye tests
If you require employees to perform work primarily require lots of screens, glasses, contact lenses, and eye tests are tax-free benefit for your employees, as those are necessary for them to perform the duty of work. Some may be required for health and safety reasons. So it pays to look after your employee’s wellbeing.
Value added tax and duties
Duties and VAT on drugs, alcohol and cigarettes
Those are known as killers for our health. The government is levying duties and VAT to make them more expensive, so that prevent people from purchasing them.
Zero-rated VAT for food in raw and whole form
Currently VAT is charged at 20% if that is standard rate. However, the VAT is at 0% if the food is in raw and whole form. That include raw vegetables, fruit and meat which are healthier and more nutritious to our body than processed foods.
Healthcare services are exempt from VAT
Healthcare services that primary purpose is to restore human health is exempt from VAT, as the Government want it to be affordable. Even if we have free healthcare system in the UK, the private healthcare services (e.g. dental treatment, etc) are exempt from VAT.
Why it is important to have our tax system designed to encourage people to live a healthier lifestyle?
It costs the NHS more than £11bn per year to treat the diseases that are caused by poor lifestyle choices (Public Health England). Those include chronic deceases like diabetes, obesity, or even cancer. 85% of the chronic diseases are preventable by healthier lifestyle choices.
On the other hand, there is recent news on the press about junior doctors’ contract, and nurses pay-cut. I’ve even heard the news about junior doctors committing suicide, due to the pressure they are facing from work and financially. Doctors are the profession who suppose to save other people’s lives, but who is there to save their lives?
Is the public really short of funds to pay doctors’ wages? Our current healthcare system is more of disease care, rather than healthcare. If tax is there to regulate people to behave a certain way, how can the tax system help encourage more people live healthier?
Incentive system: VAT and duties
As we mentioned above that the duties and VAT are levied on cigarettes, drugs, etc as they are bad for our health. However, I’ve always been health conscious myself about the food/products that I put in my body. My recent research also shown that refined sugar is as bad as drugs, and even poisonous. And those are leading causes of diseases like diabetes, obesity, etc. But products that are high in refined sugar are not levied taxes/duties the same way as drugs.
Why wouldn’t the Government consider levying duties/taxes on refined sugar or other unhealthy products, rather than trying to regulate healthcare professionals’ pay?
More tax breaks for healthy lifestyle?
A few years ago, we’ve heard about a petition for ‘Run to work scheme’. That was intended to work similarly to cycle to work scheme that business owners can get tax breaks when they encourage their employees to run to work. However, this didn’t get reinforced.
Currently, there are tax breaks to incentive employers to provide hybrid/low emission car for employees as these are more environmental friendly. Why wouldn’t we have more of the similar tax incentives for healthy lifestyle?
I believe that we need more of these schemes so that people can be incentivised to exercise more, make healthier life choices so that they can add more value to the organisation or the society.
How making better lifestyle choices can make healthcare system more efficient
Thomas Eddison said ‘The doctor of the future will give no medicine, but will interest her or his patients in the care of the human frame, in a proper diet, and in the cause and prevention of disease.‘
If more people are incentivised to look after their own health, how much less it will cost for NHS to treat the chronic diseases? Then it will free up more money that focus on what healthcare meant to be:
– Prevention of disease
– Better education in schools for proper diet and healthy lifestyle
– Doctors’ welfare so allow them to look after themselves first, then they can look after others better
– Projects/public facilities that can help enhance people’s lifestyle in general.
We all need to pay the fair share of tax. As a tax accountant, I’ve been helping people reduce their tax burden. I know people are complaining how much taxes are deducted from their pay cheque. However, would it be more empowering to know that the money we pay into the system is there to enhance people’s health?