Ministerial committee rejects bill to exempt prescription drugs from VAT

The proposal was raised by Meretz MK Ilan Gilon and supported by a number of MKs from parties in both the coalition and opposition.

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November 2, 2014 17:24
1 minute read.
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The Ministerial Committee on Legislation on Sunday voted against giving government support to a bill that would eliminate the value- added tax on prescription drugs.

Health Minister Yael German, Immigration and Absorption Minister Sofa Landver and Senior Citizens Minister Uri Orbach abstained.

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Meretz MK Ilan Gilon submitted the private member’s bill, which has the support of a number of MKs from parties in both the coalition and opposition. Gilon said he would raise the bill before the Knesset plenum on Wednesday in a final effort to get it approved. Finance Minister Yair Lapid and Treasury officials opposed the legislation.

“Whoever is ready to kill himself over zero VAT for new apartments [for those who serve] has, without blinking, brought down a bill to exempt prescription drugs from VAT,” Gilon said, in a reference to Lapid.

No explanation was given for German’s vote, even though she has complained about the high cost of copayments for drugs that make it difficult for the poor to purchase them, but the health minister is from the same party, Yesh Atid, as Lapid.

“Prescription medications, especially for chronic illness, are a vital and basic product needed for health, and the government has responsibility for ending the reality in which sick people have to choose between buying food and drugs for their health,” Gilon said.

“Israel has fallen behind the US and many European countries that have instituted an exemption from VAT or a reduction of tax on prescription drugs,” said the Meretz MK. “Private health expenditure here is along the highest in the OECD countries, and it is growing. In reality, more people are getting less, and fewer are getting more. VAT, which is 18 percent here, is regressive and the most harmful tax on the weakest socioeconomic groups.”



According to World Health Organization research, there is zero or reduced VAT on prescription drugs in Sweden, and the same goes for sales tax in most US states, he continued.

In the Netherlands, the VAT in general is 19%, but the VAT on prescription drugs is 6%. In Israel, there is no VAT only on fresh produce and trade of diamonds.

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