[Ip-health] New taxes on medicines set to hit hard on poor

[Alec van Gelder]

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I am somewhat surprised this outrageous policy in Tanzania hasn't been disc=
ussed.

http://www.ippmedia.com/ipp/guardian/2007/07/26/95148.html

New taxes on medicines set to hit hard on poor

2007-07-26 09:44:43
By Perege Gumbo
Fears are emerging that the poor are likely to be crowded out of access to =
some basic medication as newly announced taxes tend to make them more expen=
sive.

A lump sum 10 percent import duty was imposed by the government on all phar=
maceutical products outside the so called ?essential drugs?. Industry deale=
rs have said this would automatically translate itself into higher market p=
rices for patients.

These concerns are now the subject of dialogue between the pharmaceutical p=
roducts` dealers and the Tanzania Private Sector Foundation (TPSF) as they =
seek audience with responsible government authorities to discuss this matte=
r of public interest.

The matter has brought two business lobby groups at logger heads. The Confe=
deration of Tanzania Industries (CTI) is said to have urged the government =
the impose 10 percent import duties on pharmaceutical products, hoping this=
 would protect infant domestic medicine industries.

``We asked the government to impose the 10 percent duty to capacitate our l=
ocal pharmaceutical industries grow as they now have big production capacit=
y to sufficiently cater for the local market demand`` the CTI Director of P=
olicy and Research Hussein S. Kamote said.

He refuted the notion that the duty was going to affect poor people saying =
that the essential drugs, anti-retrovirals (ARVs), anti-malaria, and anti-t=
uberculosis medicines would be exempted from the duty.

But Kamote`s arguments have vehemently been countered by the pharmaceutical=
 importers who claim that the local pharmaceutical industry was still far b=
ehind from meeting the local market demand.

Their side of view is apparently supported by the Tanzania Private Sector F=
oundation (TPSF) who jointly said that about 80 percent of the drugs circul=
ating in the local market were being imported.

The Tanzania Association of Pharmaceutical Industries (TAPI) chairman Haris=
h Dhutia said the Tanzania?s medication market was experiencing ``a cut thr=
oat competition whose 10 percent import duty addition would adversely affec=
t the poor``.

He argued that from simple economic principles, the end buyers of the drug =
are the sick people who have no alternatives when it comes to getting medic=
ation that is not manufactured locally.

The imposition of duty on medics would just worsen the matter bearing in mi=
nd that the two partner states in the framework of East African Community-K=
enya and Uganda, have decided to level zero percent on the same products.

Kenya decided to zero-rate the imported pharmaceutical drugs despite the fa=
ct that it has the largest production capacity as well as numerous industri=
es as when compared Tanzania.

There are ranges of imported medical products that are not being manufactur=
ed by the local pharmaceutical industries.

TAPI and TPSF are of the view that the government should reconsider the iss=
ue by waiving value added tax (VAT) on local pharmaceutical industries, or =
even better lower income tax rates or other export incentives if it were se=
rious about protecting local drug industries.

In a recent breakfast meeting organized by the Tanzania Food and Drugs Auth=
ority (TDFA), participants unanimously agreed to seek consultations with re=
sponsible government authorities over the matter.

The President of the Tanzania Chamber of Commerce, Industries and Agricultu=
re (TCCIA) who is also one of the executives of the TPSF took the responsib=
ilities to lead the dialogue process.

Two years ago, pharmaceutical industries lobbied for the 10 percent imposit=
ion as import duty in vain.

The then Minister for Finance Basil Mramba rejected the request on the grou=
nds that the important person was the patient and not the pharmaceutical co=
mpanies.
*=09SOURCE: Guardian

Alec van Gelder
Research Fellow
International Policy Network

3rd Floor, Bedford Chambers
The Piazza, Covent Garden
London WC2E 8HA
Tel: +44 20 7836 0750
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