Tax on medical products hurting the poor, pharmas and entrepreneurs
A specialist attends to a patient undergoing dialysis. New tax has made cost of such services high. FILE
What you need to know:
State should rethink its strategy if it’s serious about keeping workforce healthy.
In less than two months the Treasury secretary will table the 2014/2015 Budget to the nation. Last year’s Budget is notable for the introduction of tax on basic consumer goods and on previously exempt medical products.
For the ailing health industry the reintroduction of tax is not only eroding gains made by the previous tax-exemption, but also leading to higher cost of productivity and service, which ultimately affects the poor.
Three groups in our sector’s production cycle are affected: manufacturing, service delivery and consumers.
Local pharmaceuticals are perhaps the most affected since medicines are the only visible medical item we try to manufacture locally.
Of the 30 or so odd firms doing this, the tax is making their products more expensive than imports. Since their guaranteed market share is small, especially with the county medication procurement that only looks at cost of goods, tough times lie ahead for them.
For entrepreneurs trying to invest in areas not served by public hospitals, the act has increased the cost of investing in units for managing critical and chronic terminal conditions like cancer, dialysis and Intensive Care Unit (ICU) units.
Dr Abdi Mohammed is an entrepreneur running a hospital in Eastleigh, which recently set up an ICU and dialysis unit.
He says: “As a cost, the tax on devices and medical consumables to run these units comes up to a significant sum. Passing the benefit to the patient is impossible and we have to sink deeper into our pockets to cover the escalated hospital bills.”
Incentives
For specialised services where the government has a poor investment track record, incentives should be given to spur more private sector involvement.
Public hospitals have less than 100 functional ICU beds, their dialysis units are overwhelmed and cancer units are perennially out of service with queues made in terms of months, not hours.
As a way of accelerating these numbers we should support entrepreneurs who can complement the public system.
The increase in cost of medication and services accounted by the tax is hurting the 90 per cent of patients in the lower socioeconomic groups who pay out of their pockets.
The government’s tax plan while necessary in meeting its public obligations appears to target the private sector, especially for the medical tax. The truth is that we have no private or public patients — they are all Kenyans.
It is sad that even when you are sick and non-productive hanging on to life, the government is still taxing you.
