Experts say Pakistan budget massively negative for struggling healthcare sector
KARACHI: Pharmaceutical industry experts have expressed concerns regarding the recent taxation changes in Pakistan, specifically the addition of taxes on the already struggling healthcare sector.
They argued that this will burden the sector and ultimately affect the common people’s access to quality healthcare.
“It is the toughest budget I have seen in my 35-year career,” said former Pakistan Pharmaceutical Manufacturers’ Association Chairman Tauqeer Ul Haq during a programme aired on Aaj News earlier.
“From a pharmaceutical perspective, people are struggling as treatments are already getting expensive. There are several taxes imposed on the industry, and ultimately, it will be the people who will be paying it.”
He emphasised that the increased taxation on the salaried class and the additional 10% surcharge on taxes on salaries above Rs10 million will further strain the sector.
“There was already increased taxation on the salaried class, but now, which was not a part of the Finance Bill, they have put a 10% surcharge on taxes on salaries above Rs10 million.”
He suggested that the government should bring people who earn Rs100 million into the tax net.
Adnan Siddiqui, Vice Chairman of Healthcare Devices Association of Pakistan (HDAP), highlighted the importance of medical devices and diagnostics in the healthcare system.
“There is now a sales tax imposed on all diagnostic kits,” he said, stressing that this will increase the cost of medical tests and diagnostic kits by around 20-25%.
Tauqeer Ul Haq also pointed out that the changes in taxation discourage the export industry, which was a crucial area for investment.
“You (government) have completely discouraged the export industry,” he said. He expressed concerns that the new taxes on exports will halve the $300 million pharmaceutical exports.
“There was a full and final 1% tax on exports. But now, 29% income tax and another 10% super tax has also been imposed. Who will invest?”
Industry experts suggested that the government should focus on expanding the tax net rather than increasing taxes on existing taxpayers. They warned that the current approach may lead to a bigger undocumented economy and smuggling.
However, Tauqeer Ul Haq acknowledged that the deregulation of prices of non-essential medicines has improved the access of medicines and reduced spurious drugs in the market.
“It has increased and will further improve the access of medicines. Availability will be improved, as well as spurious drugs in the market will be reduced.”
He said following deregulation and improved volumes and businesses, industry was looking to move towards exports.
“But the new taxes on exports have been a blow for the industry.”
Pakistan’s recently-finalised budget for FY25 has been severely criticised by almost all sectors of the economy as Islamabad looked to balance its burgeoning books with higher taxation.
Many analysts and experts have called it a budget that would only encourage cash-based transactions and slowdown of the economy that is already growing at the slowest pace in South Asia.
Copyright Business Recorder, 2024
Comments
Comments are closed.