FICCI appeals to FM Pranab Mukherjee to roll back the service tax
March, 07th 2011
The Federation of Indian Chambers of Commerce and Industry (FICCI) has expressed concern at the budget proposal to levy a 5 per cent service tax on treatment and health check-ups at centrally air-conditioned private hospitals (with 25 beds or more) and diagnostic labs, as this would compromise on the quality and safety of healthcare delivery, jeopardise preventive care and have an adverse impact on the rural population.
The FICCI has appealed to Union Finance Minister Pranab Mukherjee to roll back the service tax and accord infrastructure status to the health sector.
It pointed out that the levy would have a negative impact across the healthcare spectrum.
Citing some examples, it said that air-conditioning in hospitals was an essential need, not a luxury. This was substantiated by the National Accreditation Board for Hospitals guidelines, which do not provide accreditation to hospitals without central air-conditioning, for split or window air-conditioning increases the risk of infection in the hospital. The service tax measure would deter hospitals from going in for central air-conditioning, leading to an increase in the already high infection rates in many of the hospitals.
A reduction in the overall funding for the National Health Programmes, coupled with an increase in diagnostic costs, would neutralise the negligible efforts made towards preventive care and further increase the burden on the secondary and tertiary care.
The 20 per cent increase in the current allocation for health is misleading, as nearly 80 per cent of the health expenditure is found to be financed out of one's own pocket. The rural population has increasingly been affected by onset of non-communicable/life style diseases. Most rural patients seek treatment at the tertiary care hospitals in the cities by mortgaging their personal assets.
Any increase in healthcare costs, as would be inevitable with the tax levy being passed on to the patients, would push them to the brink.
This would add to the 3.3 per cent of the population which is pushed below the poverty line due to the healthcare burden.