Health must not be a luxury, is the response of the interlocutors of “Nezavisne Novine” to the initiative of three healthcare funds in Bosnia and Herzegovina, by which they request the abolition/reduction of VAT on medicines and medical devices, or that the funds during the distribution of income from indirect taxes on the basis of the collected VAT – and for this purpose, directed to fund accounts, with the aim of financing the health care of insured persons.
The profession believes that Bosnia and Herzegovina should adopt solutions that would make it possible to abolish or at least reduce the tax on drugs and medical devices, which currently amounts to 17 percent, which would at least help citizens to a certain extent, because the fact is that a greater number population does not have money to buy the necessary medicines.
It should be remembered that the VAT in BiH is unique for everyone and amounts to 17 percent, which practically means that the same amount of tax is paid on medicines as, for example, on expensive vehicles.
As for the initiative itself from the health insurance funds of the Republika Srpska, the Federation of BiH and Brčko District, it reminds us that BiH is the only country in the region that has a single rate of VAT on medicines and medical devices, and which is incomparably higher than in Serbia ( 10 percent), Slovenia (9.5 percent), and Croatia and North Macedonia where it is 5 percent.
They add that according to the BiH VAT Law, these funds are exempt from the obligation to pay tax on medical and health care services, but they are required to pay VAT on medicines, medical devices and equipment, which, they say, is a big burden for the funds. because in 2022 alone, over 266 million BAM in taxes were paid on this basis (Serbia about 100 million BAM, FBiH about 164 million BAM and Brčko District about two million marks).
This initiative should now be decided by the Management Board of the BiH Indirect Taxation Administration (ITA Board), and if it gets the green light, it will be referred to the Council of Ministers of BiH, and then to the level of the Parliamentary Assembly of BiH (both houses and commissions).
The Management Board of ITA BiH says that they are aware of the initiative and that it will be decided on at the next session.
“The Board of the ITA did not officially receive the initiative of the Ministry of Health of the RS, but the ITA prepared an opinion regarding this initiative, which was previously submitted to the Council of Ministers of BiH, the ITA and the Ministry of Finance and Treasury of BiH. It will be considered at the next session, and we cannot make any decisions of the Board to comment until the discussion and voting is done at the session of the Board of Directors”, answered for “Nezavisne novine” from the Office of the Chairman of the Board of ITA BiH Srđan Amidžić.
However, well-informed “Independent” sources say this is difficult to implement.
“There have been attempts like this before, but they didn’t pass. And if they pass the Supervisory Board, they will stand in the parliament. Maybe we should make an exception, like for donated food, but then there will be room for the black market,” claims the source.
And Mira Pekić, member of parliament in the PDP-SDS Club and the List for Justice and Order in PD PS BiH, confirms that similar initiatives have reached the authorities before, but that there was no response.
“Today, we have a much larger volume of indirect taxes that are collected, so the ITA of BiH and the ITA itself should be the initiators of such an initiative. I welcome any initiative to reduce VAT on everything that can help citizens, from medicines to basic foodstuffs and excise tax, but at the same time we should seriously think about increasing the VAT on some luxury items, because there is a huge gap between the population in Bosnia and Herzegovina, and think about helping people who are on the verge of poverty,” Pekić said.
The initiative of the funds is also positive for economist Ermin Cera, who believes that the best solution is to first collect tax money and then return it to the health system.
“It is clear that we have the highest tax rate for this category, but I don’t know how ready the ITA is in terms of resources and processes to introduce a differentiated rate in a short period of time,” he points out.
And the Directorate for Indirect Taxation of Bosnia and Herzegovina is not ready for that. They believe that there is no need to change the VAT rates, because it is a complicated procedure, and because, in addition to the VAT Law in BiH, the Law on the Indirect Taxation System and the Law on Payments to a Single Account should also be changed. and income distribution, and several by-laws.
“We believe that it is better to collect all revenues from VAT, and then through various social benefits direct these revenues in larger amounts to the most vulnerable categories of the population. In this way, these categories would feel a direct benefit and would not depend on price corrections after the eventual abolition or reduction of the VAT rate on medicines,” states the answer to “Nezavisne novine”.
