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Protests against India's healthcare tax

India's Union Government may withdraw its proposed healthcare service tax proposed for 2011-12, further to protests

India's Union Government may withdraw its proposed 5 per cent healthcare service tax proposed for 2011-12, following a strong reaction from the public and medical fraternity.

Currently, service tax is levied only on health check-ups carried out by hospitals for employees of business entities and health services offered under insurance schemes. The 5 per cent tax will push up the medical expenses of all patients in the country.

It is already estimated that less than 10 per cent of the Indian population can afford heart, brain or cancer surgery; the tax will reduce this number further.

The budget proposal has received widespread criticism. The Indian Medical Association has demanded its withdrawal, and chairman of the hospital chain Narayana Hrudayalaya has stated it is a 'Misery tax' because the government wants to make money out of a patient's misery.

The medical fraternity has declared March 12 as 'Misery Day', when healthcare providers and patients will gather near the Karnataka governor's residence to present the Axe the Health Tax petition. This calls for a roll back of the tax and withdrawal of central sales tax, custom duty and VAT on the health sector for at least 10 years until all citizens have access to affordable healthcare.

As reported on pharmabiz.com, Dr Devi Shetty, managing director, Narayana Hrudayalaya hospital, said: "Our Government does not have the moral right to tax healthcare. It spends less than 1 per cent of the GDP on this sector. The only other Asian country that spends less than India is Pakistan. Even the governments of sub-Saharan Africa spend more for healthcare than us. In fact, 80 per cent of the healthcare cost in India is paid out of your pocket with hard earned money."

He added: "Hospitals pay central sales tax, custom duty, luxury tax, entry tax, VAT, excise duty and electricity bills at the highest tariff levels. Approximately, 25 per cent of the construction cost of the hospital goes to the Government in some form of tax. With all these prevailing Government taxes, how can the hospitals provide affordable health care?"

8th March 2011

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