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Reduced VAT on medicine will not be cancelled; other solutions will be considered

The matter regarding the cancellation of reduced VAT on medicine will no longer be viewed by the government. Instead, other solutions for financing healthcare will be considered, said Prime Minister Maris Kucinskis on Tuesday, 18 April, after a meeting of coalition partners.

He said that cancellation of reduced VAT on medicine was a proposal from Latvian Employers’ Confederation. It was reviewed by Healthcare Ministry, which concluded that this proposal is not supportable.

Kucinskis admits that new solutions for healthcare financing will be considered. It is planned to reach an agreement on them this week.

«A schedule has been compiled to resolve this matter – it will be discussed by government tax reform work group this week and the coalition and National Council for Trilateral Cooperation next week,» Kucinskis says.

As it is known, Finance Ministry had previously noted that it would view the proposal to cancel reduced VAT rate on medicine.

Finance Minister Dana Reizniece-Ozola’s advisor Jurijs Spiridonovs had previously said that after receiving information from LDDK, the ministry turned to the State Revenue Service for assistance. It was concluded that only medicine traders would benefit from reduced VAT rates.

According to Spiridonovs, initial estimates showed that reduced VAT rate’s cancellation on medicine would secure revenue of EUR 83 million for healthcare sector.

Healthcare Minister Anda Caksa would rather take finances from new political initiatives to finance healthcare industry, not from the increase of VAT on medicine. The minister did refuse to comment on this initiative in an interview to LNT. She said the proposal is too recent and it came from outside the government. It is necessary to analyse it more detail, especially in regards to the effect on end price of medicine.


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