VAT on Meds ‘is bad medicine’

It was mind boggling to say the least, listening to Minister of Health Alvina Reynolds on the news last week when asked about VAT on medicine and pharmaceuticals. When asked why there was VAT on medication, following a long-winded tirade her response was that it was a matter she would look into with the VAT office. Really?
Did the VAT office have the legal authority to pass all the amendments and forge the legal instruments to implement Value Added Task? For all we have read and been made to understand the Minister of Finance has the sole legal authority to make changes and amendments. And for all we heard too, there were discussions at the ministerial and Cabinet levels as well as within executive levels of Government in finalizing the draft document which would pass into law under VAT. So why was the critical area of medicine somehow overlooked by the Minister of Health ahead of the October 1 implementation date?
Now the explanations are as confusing to Joe Public as they are to health care practitioners. The truth of the matter is, the prices of over the counter medications as well as prescription drugs have all gone up and it is hitting Saint Lucians where it hurts most. Already the island is plagued with chronic health issues; diabetes, cancer, hypertension and other serious ailments. We are also faced with poor child nutritional health, poor prenatal health care, teenage pregnancies, HIV & Aids, all of which compound the problems facing this poor nation. Added to that, there is no Universal Health Care and many Saint Lucians are without any health insurance. These are undisputable facts.
A press release by the Government on Thursday headed “No Duty on Medicines,” laced with all sorts of colourful words was nothing short of misleading.
“Mindful of the likely impact of VAT on the prices of medicines, the Government took a major step to cushion the retail price of medicines,” the release says. “Prior to the implementation of VAT, medicines attracted an Import Duty of 10 percent followed by 5 percent Consumption Tax,” it went on, explaining, “The Government of Saint Lucia secured the agreement of Caricom to suspend the Common External Tariff on pharmaceuticals for a period of four years from May 01, 2012 to April 30, 2016… This means that unlike other imported goods, Import Duty will not be charged on medicines for the next four years. So VAT will not be imposed on top of the import duty that medicines attracted in the past,” the release goes on to say making no mention of the absorption of the common external tariff.
However at a press conference on Thursday Adria Sonson head of the VAT implementation office tried to explain that the 15 percent VAT replaces the collective of the 10 percent import duty and the 5 percent consumption tax. Her explanation of the rising price of medicines, “consumers should be mindful that old stock would attract the 15 percent VAT prior to suspension of the consumption Tax.”
But just who is monitoring what is old stock verses new stock and did any prices go down after May 1, 2012 when the import duty was suspended?
“Some of these explanations are really just compounding and confusing the matter,” former Chief Medical Officer Stephen King told the STAR Friday. King who had just last week expressed his own concerns about VAT on medicines says at the end of the day the consumers are the ones who will suffer.  He also questioned the mechanisms to monitor the new system and wondered why VAT on pharmaceuticals was not just removed altogether.
The truth of the matter is there are more questions than plausible answers and explanations where VAT is concerned. One gets the sense that VAT was as rushed as the controversial Labour Code, which was hurriedly passed in 2006. Later recalled in 2007, the bill was reintroduced this year and passed, this time without the essential component of a minimum wage.
The ‘VAT on Medicines’ press release concludes; “the Government wishes to assure the public that it will constantly monitor the situation as it would not wish its citizens to be unduly prejudiced or affected by the price of medicines.”
A tad too late don’t you think? Saint Lucia’s are already being affected by the prices of medicines whether the powers that be would like to pretend otherwise or not.

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