The Committee recommends that the Treasurer and the Minister for Health and Ageing investigate the use of tax incentives to improve the affordability of fresh, healthy food and access to physical activity programs for all Australians, particularly those living in rural and remote areas.
Noted.
The Australian Government considers that the primary role of the tax system is to raise revenue, and that assistance to promote particular social outcomes is best delivered through direct outlay programs. The Australian Government uses financial incentives to promote public health benefits where appropriate, such as increasing the excise on tobacco by 25 per cent from 30 April 2010, and removing the tax loophole on alcopops. However, financial incentives need careful design and execution.
Under the income tax law, tax deductions are generally allowed for losses or outgoings incurred in gaining or producing assessable income. Generally, for a deduction to be allowed there needs to be an essential connection between the expense and the individual’s income producing activities such that the expenditure is incurred as part of the operations by which the taxpayer earns income. In the case of gym memberships, this is a private expense; it is not incurred in relation to the performance of duties for which the person is being paid.
The Australian Government does not consider that the tax law should be amended to provide tax deductions for the costs of physical activity programs as the deductions would not provide timely assistance to Australians in greatest need of assistance.
Currently in Australia foods such as hot takeaways, confectionery, snacks, ice-cream, biscuits and soft drinks are subject to the Goods and Services Tax, whereas fresh, healthy food is not. Through the Australia’s Future Tax System Review (2008-09), chaired by the then Secretary to the Treasury, Dr Ken Henry AC, the Australian Government has considered options for taxing unhealthy or ‘junk’ foods. Such taxes may create an incentive for consuming fresh, healthy food, however the review found that:
While obesity does involve significant health and productivity costs, the relationship between these costs and the consumption of particular products is complex. The risk of obesity is affected by lifestyle, such as diet and physical activity, as well as inherited and social influences.
This makes it very difficult to estimate spillover costs, if any, of identifiable foods or food types. In addition, any quantifiable health benefits of imposing the [unhealthy food] tax would need to be weighed against the loss to those people who are at low risk.