Monday, December 1, 2014

Value Added Tax (VAT) and Healthcare Cost in The Bahamas

Warning on VAT healthcare implications

Guardian Business Reporter

Value-Added Tax (VAT) Private Sector Education Task Force Co-chair Jasmine Davis said yesterday that vatable healthcare will have “huge socioeconomic implications” for the country’s workforce if not readdressed by the government.

Davis told Guardian Business that the task force continues to push physicians and healthcare facilities to register for VAT to avoid incurring penalties, but stressed that the medical community will continue to lobby for exempt status simultaneously.

“Medical services as described in the act are essential services, and it has huge socioeconomic implications. What we don’t want to see is persons opting out of getting healthcare,” said Davis.

She pointed out that the tax on healthcare would not only affect lower-income households, and anticipated that businesses would shift the additional 7.5 percent of healthcare costs onto employees.

“What would result is that we would have a sicker populace, which means that people will not be working, which means that dollars will not be moving through the economy, which means that the amount of money that is expected to be derived through taxation will not happen,” she said.

Davis could not provide a figure for the number of healthcare professionals registered for the tax to date. However, she claimed that the sector is making good progress in registering.

Davis also reasserted that healthcare and education are benefactors of the VAT system in other jurisdictions that have implemented the tax.

“Funds from taxation are normally earmarked for healthcare and not the reverse, where healthcare is taxed to reduce the deficit,” said Davis.

The Ministry of Finance recently clarified that national exams and other education services will be exempt from VAT. Given these exemptions, Davis argued that healthcare was planned to be exempt from VAT up until the last revision of the tax’s legislation tabled in July.

November 28, 2014