PHA-Exchange> NYTimes: A Tax on the Sick

[Claudio]

From: "Vern Weitzel" <vern at coombs.anu.edu.au>
> Editorial
  A Tax on the Sick
 Published: July 4, 2006
>
> Poor countries have long claimed that their people suffer needless
> sickness and death because the price of medicines is too high. They are
> right. But in many cases, part of the fault lies in their own policies,
> which jack up prices by taxing medicines, raw materials for drugs and
> medical devices.
>
> Six years ago, African leaders pledged to stop putting taxes and import
> duties on bed nets. These nets protect people from mosquitoes that carry
> malaria, but are often slapped with high textile tariffs. In many
> countries, government taxes at least double the price that consumers pay
> for nets. In Tanzania, for example, the retail price dropped from $6 to
> $2.50 when taxes were eliminated, a huge help for families that live on
> less than a dollar a day. Usage of bed nets soared. But many governments
> that made the pledge have not followed through so far.
>
> Adding sales tax or value-added tax to medicines is the most regressive
> form of taxation, and no country should do it. India charges up to 100
> percent for medicines on its list of lifesaving drugs. Morocco's tariff
> is 12 percent. Nigeria adds a 20 percent tariff to the price of vaccines.
>
> The United States, Singapore and Switzerland have proposed to the World
> Trade Organization that countries eliminate tariffs on medicines. This
> makes perfect sense. Only India seems to be using tariffs to protect
> local generic industries, a strategy that in some limited situations
> could indeed lower costs to consumers. The rest apply tariffs simply to
> raise revenue.
>
> A study by the World Health Organization showed that governments make
> very little money from these charges, which can really squeeze the sick,
> as even a small tariff adds to the price that forms the base for later
> markups. Some countries probably retain tariffs only because their
> health ministries, which know how noxious they are, don't communicate
> with their finance ministries, which won't let go of any tax without a
> fight.
>
> The proposal to the World Trade Organization would probably have gotten
> a lot more support by now if it weren't coming from Washington, allowing
> some countries to dismiss it as a way to help American drug makers while
> scoring public relations points. It may be that, but it's also a good 
> idea.
>
> source:
http://www.nytimes.com/2006/07/04/opinion/04tues4.html?_r=1&n=Top%2fOpinion%2fEditorials%20and%20Op%2dEd%2fEditorials&oref=slogin