Taxation and health
It quite surprised me that it was the BIR that issued the tax-exempting MC since the BIR, conformably to its nature, is better known for raising revenue instead of collecting taxes.
Daily TribuneIt quite surprised me that it was the BIR that issued the tax-exempting MC since the BIR, conformably to its nature, is better known for raising revenue instead of collecting taxes.
On 26 January 2024, the Bureau of Internal Revenue released Revenue Memorandum Circular No. 17-2024, exempting 21 medicines from the 12 percent Value-Added Tax coverage.
The MC was issued by BIR Commissioner Romeo D. Lumagui Jr. in response to the letter dated 29 November 2023 from Food and Drug Administration Director General Dr. Samuel A. Zacate, submitting for BIR action an updated list of VAT-exempt medicines under Republic Act 11534, otherwise known as the Create Act.
Health Secretary Teodoro Herbosa welcomed the MC as it exempted from VAT 21 medicines used for treating various illnesses, some of them life-threatening, making the medicines more affordable and thus more accessible to the public.
The MC specifically mentioned medications indicated for diseases such as cancer, diabetes, hypertension, kidney disease, high cholesterol, tuberculosis, and even mental illness.
There are, for instance, (a) panitumumab and fulvestrant for cancer treatment; (b) teneligiptin for the treatment of type 2 diabetes mellitus; (c) atorvastatin calcium and atorvastatin + fenofibrate for high cholesterol; (d) tolvaptan, mannitol, alpha keto analogues with essential amino acids for kidney disease; (e) isoniazid with pyridoxine hydrochloride for tuberculosis and (f) desvenlafaxine for mental illness.
I cannot emphasize enough the importance of these medicines as they are essential for curing those afflicted with the cited dreaded diseases. But these medicines are not cheap and are, as a matter of fact, quite expensive. Therefore, the fact they are made more accessible and affordable to those who need them the most is something that we should be glad about.
It is worth noting that the medications mentioned above will be included among the 59 medicines that were previously exempted from the 12 percent VAT under Section 109 of the National Internal Revenue Code of 1997 (the Tax Code), as modified by the Tax Reform for Acceleration and Inclusion Law and the Create Act.
It quite surprised me that it was the BIR that issued the tax-exempting MC since the BIR, conformably to its nature, is better known for raising revenue instead of collecting taxes. Taxation is indispensable to the existence of government, such that the government needs the contribution of its citizens to operate and function well.
On the one hand, the FDA has a mandate to protect and promote the right to health of all Filipinos through the listing and regulation of food and all kinds of health products.
Obviously, this is yet another example of two different but separate executive offices working together to achieve a common goal that ultimately benefits the people. This may seem easy to achieve after it is done, but it is not. Different agencies have different mandates, and there are a lot of problems to be fixed and issues addressed.
Sometimes, one agency’s programs may not immediately align with another agency’s plans. If that happens, the net effect in our example would be that the goal of the FDA of promoting the people’s right to health via affordable medicines runs contrary to BIR’s goal of raising revenue by collecting as much in taxes as it legally can. However, with the proper dialogue and communication, both agencies can find a middle ground.
In a perfect world, medicines would be free and accessible to all individuals who need them, but due to production costs and raw material prices, they are almost never free. The next best thing is controlling the factors contributing to high prices, such as taxes incurred in the production and distribution chains, especially for critical medicines.
This is the middle ground. FDA has lowered the prices for 21 — and counting — medicines. BIR is neither shortchanged nor threatened, as there are still other medicines, and indeed a whole horizon of other products, which may be legally and appropriately taxed. This is the compromise for both agencies.
I hope more government programs are discussed and realized through interagency cooperation and dialogue. This is how the government should act — always looking for opportunities to serve the people and improve their quality of life. In turn, the government can expect the people to return its noble gesture by giving it their cooperation and trust.