The budget proposal to levy a 5% service tax on all services provided by centrally air-conditioned clinical establishments has stirred up a storm. Industry insiders say unless the government supports the sector, healthcare will be unaffordable for 90% of the population.
However, the CBEC Chairman S Dutt Majumder has defended the levy. Said Majumder, "In course of time when the GST is coming, most of the service would be there. So I don't see any reason. Plus we're not touching the Aam Janta because the government hospitals are out, less than 25 players and central are out. It was already there last year. But what was there was that it was happening through the insurance scheme. And actually in effect, none was getting any benefit. because insurance companies used to tell the people, that you go and pay it and get reimbursement from us, because if they're paying it directly there is no service tax, so we were not getting any tax at all, so now at least through the insurance, it will be more facilitative for the people."
In an interview with CNBC-TV18, Dr Devi Shetty, Chairman, Narayana Hrudayalaya discussed the ramifications of the move.
Below is a verbatim transcript. Also watch the accompanying video.
Q: You have issued public advertisements this morning against the government move. You have called for a nationwide protest against the government in position of this 5% service tax. You are calling the misery tax. The government however as we just heard seems to be clear that this is not a tax against the aam aadmi. How do you respond to the government’s argument?
A: First of all what you have said is service tax is not on the hospital. Service tax is on healthcare and over 90% of the people of this country cannot afford healthcare. We need to do 25 lakh heart surgeries a year. Only 90,000 privileged people undergo heart operation. Most of them sell what they have and they come for the operation.
Now if they impose this 5% service tax they have to pay another Rs 5,000 to Rs 10,000 extra for the heart surgery and cancer care will go up by Rs 15,000 to Rs 20,000. Where is the money coming from? Our government spends less than 1% of the GDP on healthcare.
The only other government which spends as much as India is government of Pakistan. Even sub-Sahara, Africa, they spend more than 2% to 3% of the GDP on healthcare. 80% of the healthcare cost in this country is borne by the citizens by selling what they have. What explanation does the government have now to say that they have to sell some more things to give the money to the government as a tax? Where is the justification?
Q: As you just heard the government has once again reiterated today that it is unlikely to roll this tax back and there is a 50% abetment and hence this is not an anti-people tax. You are accusing the government of misleading the country aren’t you?
A: This is totally misleading the country. First of all in the tax page it was mentioned that only the air conditioned hospitals have to pay the taxes but if you go through the minute details any hospital having a single air condition has to pay the tax. First of all today in this country legally you cannot perform a single operation in the gall bladder or the heart without air conditioned operation theatre. Government agencies will not give the license to run a Blood Bank without air-conditioning. None of your CT scans or MRI will function without air-conditioning.
Technically speaking, every hospital will come under the tax net. They have given discount, initially they raised the service tax to 10% and they brought it down to 5%. This is a discount. So this is totally misleading the people. All I want to say is how much more a common man has to pay now for a heart operation or a cancer surgery before the service tax was imposed. It will be a minimum of Rs 5000-20000 more. I want to know who is going to pay the money.
Q: I am going to go back to the government’s argument. The government’s argument is that it is moving towards a unified goods and services regime and in keeping with that move it is widening the service tax net. Do you find any consolation in that argument at least?
A: I will not buy the argument because all the other tax implications government has put in can be passed on to the customer. I want to know where is the patient going to, who is he going to pass on the cost? He has to sell something more of what he has. He can’t, a patient cannot pass on the cost of Service Tax to somebody else. So where is the justification? Government doesn’t do these operations. When people go for private healthcare paying out of the pocket, you are saying that you give me some more money for the tax.
This is totally unacceptable. We are fighting, I am not fighting because it is going to help me. I am going to pass it on to the patient but I am going to tell the patient that because you are unfortunate to be born in this country you have to pay this extra money for the healthcare. If this Indian citizen was born in England he can go to any hospital and get a free heart surgery done. There is no difference. He is unfortunate that they are born in this country.
on your mobile
On your phone browser type