.
The FBR’s latest push to expand the use of point-of-sale (POS) systems is creating controversy in the healthcare sector, with the Pakistan Medical Association (PMA) lambasting the move as the first step towards taxing basic health services. We hope this is an exaggeration, because there is no excuse for any government anywhere in the world to be taxing basic medical care. Already, even though most medicines are only subject to a nominal 1% tax, their ingredients may be taxed as high as 18%, which contributes to higher consumer prices. Meanwhile, many medical devices — which are also tax-free or minimally taxed in other countries — do not get any tax exemptions.
It is worth noting that Pakistan already taxes many direct medical services on a tiered scale, which again goes against international practices. Taxing physicians’ income is perfectly fine, but taxing medically necessary procedures and clinical care literally adds insult to injury, especially for people who may be struggling with the cost of care.
PMA claims the use of POS devices is the first step in taxing all medical services. While this may be true, it is also possible that FBR will use POS data to calculate a clinic’s revenue, which in turn can be used to estimate the owners’ incomes and determine whether they are evading income taxes. If the latter is the case, it would help address one of the chronic tax collection issues facing the country, where salaried workers — including doctors — are squeezed for taxes. At the same time, business owners and self-employed people hide most of their income and pretend to barely make enough to keep the lights on. This would also address the PMA’s concerns about patient privacy, since the FBR could structure the system to record only transaction values, rather than personally identifiable information.
The government needs to ensure that taxes on the entire healthcare sector go down, not up. It is the state’s responsibility to ensure people have access to quality healthcare, rather than extorting the sick to raise revenue.
