Exempt hospital fees, medicine from GST

30 Jan 2008, The Straits Times

Question

Name of the Person: Anthony Oei

Government absorbs GST for all subsidised patients

IN PARLIAMENT on Jan 21, Health Minister Khaw Boon Wan cited the 2percentage point increase in the goods and services tax (GST) as one of the reasons for rising medical bills ('Health-care costs jumped 6.2% last year'; ST Jan 22).

Indeed, the GST inflates hospital fees and the prices of medicine the sick pay. This brings up the question: Why impose the levy on medical bills?

No one wants to be ill but, sadly, no one is immune to diseases, regardless of the precautions one takes. Therefore, to be taxed for being sick is an unkind cut. The tax can be very painful if one's medical bills are high. For example, a relative of mine, who was hospitalised recently, had to pay a hefty $500 in GST!

The Government should lessen the pangs by exempting hospital fees and medicine from the GST. It can go further by also exempting all medical-related equipment that hospitals and clinics buy, thereby enabling them to reduce the fees they charge patients.

The move is timely with the rising health-care costs. I do not think the Government will be out of pocket. After all, it netted an additional $990million in tax revenue last year from the increase in GST.

Reply

Reply from MOH 

Government absorbs GST for all subsidised patients

In "Exempt hospital fees, medicine from GST." (ST Forum, 28 Jan), Mr Anthony Oei cited the 21 Jan reply in Parliament by the Ministry of Health, and  suggested  that the Government exempt hospital fees, medicine, and medical-related equipments from GST.

    As mentioned in the same Parliament reply, the Ministry of Health has been absorbing GST in full for all subsidised patients in public hospitals and polyclinics since 1994.  For example, in  2005, when the GST rate was 5%, the Government paid for the full GST at a total of $28 million.  In 2007 when GST was raised to 7%, government subsidies to offset GST increased to $39 million, continuing to benefit subsidised patients.  Subsidised patients do not bear any GST cost, as it is entirely borne by the Government.   Hence, GST did not raise the cost of subsidised healthcare services.

    Providing specific subsidies is a better approach than exempting all or any hospital fees and medicine from GST.  This approach ensures that basic healthcare services remain affordable to Singaporeans, while at the same time maintaining our GST tax base.  A broad-based GST scheme allows us to keep the GST rate low and the GST system simple.

    The Government will continue to keep subsidised care affordable.  There are schemes in place to help patients in need of financial assistance. No patient will be denied medical treatment due to an inability to pay.