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Medical specialists threaten to withdraw from private hospitals over “unfair” taxes
Sri Lanka’s medical specialists are threatening to withdraw for two weeks from private practice from June 18 onwards, if their requests for a reasonable tax structure are not heeded.
The ‘Medical Specialists’ Collective’ brought together under the guidance of the Association of Medical Specialists (AMS) says that while they are opposed to the post-April 1, 2018 tax structure in which taxes have doubled to 24 percent (at the upper limit) from 12 percent, they are not opposed to the
pre-April 1 taxes and urge that this be restored. The issue revolves round income tax, PAYE (Pay As You Earn) and VAT (Value Added Tax).
The collective includes government, private and university medical specialists.
A crucial meeting has been fixed for tomorrow between the AMS and Finance Minister Mangala Samaraweera and Treasury officials to discuss and hopefully resolve this crisis, AMS President Dr. Sunil Wijayasinghe told the Sunday Times.
If the issues remain unresolved after tomorrow’s meeting, they will refrain from private sector work, starting a week later. The June 18 ‘measure’ will not affect state sector health services but cripple work at private hospitals.
“About 45% of out-patient health services are provided in the private sector and as such we are taking away part of the burden of the cost of healthcare on the government, by reducing congestion in state hospitals and the expenditure on medicines in the state sector,” Dr. Wijayasinghe pointed out.
He stressed that the unfair tax structure made the Government wealthy at the expense not only of the doctors but also the patients seeking private sector healthcare services — a compulsory need today.
From April 1 onwards, the unjust tax structure is as follows, according to the doctors:
· 15 percent VAT on consultation fee (which the patient has to pay)
· Up to 24 percent on the doctors’ (private) income
· Thus, if a doctor charges Rs. 1,000 for consultation, the patient has to fork out Rs. 1,150 for it — inclusive of VAT of 15 percent — in addition to an increase in the hospital charges. This could together total more than Rs. 1,650 for a patient.
Dr. Wijayasinghe said the Government seemed to be “singling out” medical professionals who pay their taxes duly.
“Our private income is transparent and checkable through private healthcare institutions, while other professional sectors are not so transparent,” he said, reiterating that medical specialists are not in any way opposed to paying “reasonable” income tax provided it is used for the benefit of the common man.
He lamented that an allowance (Extra Duty – ED plus Disturbance, Availability and Transport – DAT) paid to them to maintain an “essential” service in the state sector by keeping them on-call, had also now been added to their monthly state sector salary, with PAYE being calculated on that as well.
Referring to the extensive rounds of discussions they have had to resolve the matter, AMS Secretary Dr. Ravi Dayasena said they met Minister Samaraweera on May 25; Inland Revenue Department (IRD) officials on May 31; fiscal officials on June 5; and Health Minister Rajitha Senaratne on June 7.
There was a “positive response” and they were hopeful that the matter would be resolved tomorrow, he added.
In a June 6 letter to Minister Samaraweera, following a meeting with him and IRD officials, the AMS said that the maximum tax bracket for medical specialists should be 12 percent because the excessive taxation (now up to 24 percent) would compel consultants to increase fees “to earn a decent income”, which in turn would affect the patients.
It suggested that the VAT on channelled consultations (now 15 percent which the patient pays) should be removed similar to the no VAT practice in outpatient care in private hospitals.
The letter, while citing other anomalies which need to be rectified, also said that medical specialists got no benefits by the April 1 increase in the tax-free allowance from Rs. 700,000 a year to Rs. 1.2 million a year. This relief had been negated by removing the tax exemptions on the ED and DAT allowance. This “will push us to a higher tax bracket, even before we see our first patient in the private sector”.
In a June 5 letter to the Treasury’s Director General, Department of Fiscal Policy, K.A. Vimalenthirarajah, the AMS – also raising the issue of the VAT collection process – suggested the following on behalf of medical specialists:
- The private hospital collects VAT from the patients irrespective of the income of the specialist.
- The private hospital will make the payment to the IRD.
- The specialist receives a VAT certificate payment quarterly from each private hospital which will simplify VAT collection and avoid unnecessary harassment of specialists during the process.
These suggestions have also been met with a positive response, Dr. Wijayasinghe added.
| Come to government hospitals, public urged “Withdrawing our services from the private sector is not trade union action,” reiterated AMS President Dr. Sunil Wijayasinghe, categorical that state sector hospitals will work as usual. Work in the government hospitals will continue as usual. The public is advised to visit the nearest government hospital for any emergency, a statement from the Medical Specialists’ Collective stated, explaining that all medical specialists are planning to refrain from private practice from June 18, as a mark of protest against the new tax policy. | |