Tax rises in the forthcoming Budget will pile unnecessary pressure on the businesses which want to do the right thing and look after their employees’ health whilst helping build a more resilient economy.
At a time when Government talks about ‘building back better’, the measures announced in the Budget later this month will tell us whether the Government is serious about that message - or whether it outlines measures that undermine businesses’ attempts to build a healthier and more resilient society.
One way to undercut attempts to build a healthy society would be for Government to increase Insurance Premium Tax (IPT) – a levy which has already doubled to 12% since 2015. It adds to the cost of insurance for those who protect their families, their possessions and their health. It also punishes employers who want to do the right thing and look after those that work for them.
The last 18 months has squeezed small and medium sized businesses. Laden down with debt and with continued uncertainty as we approach winter, businesses are up against it.
Despite these pressures, employers increasingly recognise the importance of investing in support for the physical and mental wellbeing of their workforces. A recent study by Deloitte found that, for every £1 spent on mental health interventions by employers, they get back £5 in reduced absence, presenteeism and staff turnover. A short-term tax fix through increasing IPT could limit long-term investments into employee health by penalising the exact behaviours needed for “building back better”.
One way to support employee health (and reduce reliance on already overstretched National Health Service) is by providing health insurance as a benefit to workers. Not only does health insurance pay for urgent treatments – from physiotherapy to cancer immunotherapy – but it helps prevent serious illness and injury through access to remote GP services, mental health support and physios.
Increasing IPT will add to the cost of providing health insurance for workers. It will disincentivise those businesses who want to invest in the health of their employees and the resilience of their business.
If the Government really does want to punish workers, squeeze businesses and undermine any attempt to ‘build back better’ it should look to perverse tax rises. The answer is likely “not”.
However, if it does want to build a healthier workforce, reducing the pressure on the NHS and building a more resilient economy, it should avoid increasing taxes like IPT that undermine its central aim and message.
Budgets are as much about sending the right message as they are about balancing the books – and they only work when one complements the other.