New tax on over 200 medical instruments set to drive up healthcare costs

Experts warn that govt's new tax on medical instruments can surge healthcare costs by 25% to 30%

KARACHI:

Federal government has imposed a sales tax on over 200 medical devices, including angiography and angioplasty equipment, as well as diagnostic kits for various diseases.

The move, part of the 2024-25 fiscal budget, is expected to significantly impact the affordability of healthcare for poor patients.

Experts warn that the first ever sales tax on the diagnosis and treatment of diseases will increase the costs by 25% to 30%. This tax will also severely affect the budgets of public hospitals, leading to a notable reduction in routine operations, angiographies, and angioplasties.

Additionally, the poor and middle classes will be directly impacted in private hospitals.

Chairman of the Healthcare Devices Association of Pakistan Masood Ahmed told Express News that the federal government has imposed sales tax on all imported medical devices and diagnostic kits.

The association has written to the Prime Minister Shehbaz Finance Minister Aurangzeb, requesting the removal of the sales tax, warning that it will make treatment unaffordable for the poor in private hospitals.

"Public hospital budgets will be severely affected," said Ahmed.

"The imposition of this tax may deprive patients relying on charitable hospitals of treatment." He added that 95% of medical devices in Pakistan are imported, and this tax will increase routine test prices in private laboratories by 30%.

Former provincial health minister and President of the Private Hospitals and Clinics Association, Dr. Syed Junaid Ali Shah, stated that the 15% sales tax on diagnostic kits will severely burden patients, especially the poor.

In an emergency meeting, the association demanded that healthcare providers be granted industry status.

"Healthcare is not a luxury but a necessity," said Dr. Shah.

"This year’s budget has also imposed a 3% to 5% duty on previously duty-free healthcare products, increasing charges for private hospitals and burdening patients further."

Dr. Shah added that while private hospitals strive to avoid passing additional costs to patients, continuous tax increases will worsen the situation, as private hospitals do not receive any subsidies from the government.

He urged the government to reconsider the imposed taxes.

The emergency meeting included Vice President Dr. Bilal Faiz Khan, General Secretary Professor Dr. Farhan Isa, and Joint Secretary Dr. Muhammad Iqbal.

In a similar move, the Sindh government introduced a 15 per cent tax on medical services that is expected to add to the financial burden on patients who predominantly rely on private healthcare providers.

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

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