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Monday 24.04.2017 | Name days: Nameda, Visvaldis, Ritvaldis
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Sustento: increase of VAT on medicine could have catastrophic consequences

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUCooperation organization Sustento categorically opposes Finance Ministry’s proposed idea to cancel reduced VAT rate for medicine. It would be catastrophic for people, the organization says.

«It could result in prices in Latvia increasing by approximately 10% for medicine. In Latvia, where prices and patient fees for healthcare are some of the highest in Europe, such a situation could be catastrophic for people with low income,» says Sustento board member Iveta Neimane.

She notes that the standard VAT rate in Latvia is 21%. The tax rate is reduced for prescribed and non-prescribed medicine – 12%. Cancelling the reduced rate would make Latvia a country with the highest VAT rat on medicine in Europe.

Neimane reports that Latvia already has the highest VAT rate on medicine among Baltic States (5% in Lithuania, 9% in Estonia and 12% in Latvia), as well as one of the highest in Europe. «For example, the tax rate is 6% in Belgium and Netherlands, 4% in Spain, 3% in Luxembourg and 0% in Malta. Finance Ministry has not published any of its estimates for benefits from raising VAT on medicine. It is clear, however, that costs will increase – for non-prescribed, prescribed and state compensated medicine, as well as hospital medicine,» Neimane says.

For example, Healthcare Ministry’s estimates presented last summer show that the theoretical benefit from raising VAT to 21% for non-prescribed medicine would benefit the state budget by EUR 6.3 million.

«But did the officials calculate the negative impact on price rise on public health? How many millions of euros will we have to spend to prevent negative consequences? It is no secret that non-prescribed medicine is people’s first choice if there is an emergency, because it is nearly impossible to visit a family doctor within a couple of days – there are long queues everywhere,» Neimane says.

The expert said this about the general situation in the country: «If medicine becomes more expensive, many people with low income, pensioners and those suffering from chronic illnesses will no longer be able to afford those products. People will not be able to buy much or anything at all, and this will impact their health. State Audit has declared that 45 parishes in Latgale and Kurzeme have no family doctor appointment locations. 30 parishes do not even have simple medical facilities. Residents living in some areas have to cover more than 20 km to reach a doctor».

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