15% services tax on medical, edu facilities draws flak

Doctors, educationists criticise, say this will hinder investment in human capital

Our Correspondent June 16, 2024
Flat tax is not a cure-all for every economic ill. To maximise economic benefits, a nation should have the rule of law, property rights, sound money, limited government and low levels of regulations. photo: afp


The Sindh government has introduced a 15 per cent tax on medical services that will add to the financial burden on patients who predominantly rely on private healthcare providers.

As per the budget document, a tax of 15 per cent tax has been proposed on services offered by hospitals and clinics, as well as on educational services provided by tuition centres.

The imposition of this service tax has sparked condemnation from doctors' organisations, educationists, and economists alike, who argue that such measures could hinder investment in human capital.

Pakistan Medical Association (PMA) General Secretary Dr Abdul Ghafoor Shoro, denounced the tax as unacceptable and emphasised that the ultimate sufferers will be the patients. "More than 70% of Sindh's population seeks medical care from private clinics," he stated while predicting that such facilities will likely raise fees and service charges to offset the tax burden.

"This is a misguided policy," remarked an economist at Lahore School of Economics, Dr Waqar Wadho. He criticised the government's decision, pointing out that in other countries, hospitals are exempted from such taxes to facilitate public access to healthcare. Dr Wadho questioned why the majority of people opt for private healthcare, attributing it to the public sector's shortcomings. He argued that instead of burdening private facilities, the government should focus on improving its own healthcare infrastructure.

While speeking of the regressive nature of the tax, Dr Wadho stressed that health services are essential and inelastic, meaning people seek them out of necessity rather than choice.

"Taxing such services only exacerbates the challenges faced by vulnerable segments of society," he added. Dr Shoro expressed concern that the tax would further strain an already fragile healthcare system in Sindh, accusing the government of neglecting medical practitioners' needs and directly impacting poor patients and their families.



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