NASSAU, BAHAMAS — Financial Secretary Simon Wilson last night asserted that the practice of health insurers claiming VAT paid on payouts as inputs is “not allowed in law”.
Wilson expressed disappointment that the industry had taken the issue public ahead of meaningful discussions with the government.
“This is a technical issue,” he said during an interview with Eyewitness News.
“We are having some discussions with the health insurers. We have asked the Insurance Commission to look at the issue, convene a meeting with the insurers to discuss it further and do some international benchmarking.
“The Commission has not come back to say a meeting has been set with the industry. I am disappointed that the industry has just gone off and not allowed the process to take place. There is a tax side and a regulatory side to this and we want the regulator to lead those discussions. I’m sitting back and frankly, I’m disappointed.”
Wilson continued: “The issue really is that health insurers are claiming VAT paid on claims as input VAT and the law does not allow that. That’s the challenge. The practice they are doing is not allowed in law. General insurers don’t use the same practice but the health insurers are saying we should be allowed to do it. They are using alarmist statements about cost of medical bills going up and that sort of thing and that’s not the case. Maybe we need to amend the law to allow it but this is where we need the regulator to do the benchmarking.”
The Opposition yesterday accused the government of “adding insult to injury” by adding more costs to medical bills by virtue of a shift in its Value Added Tax (VAT) policy. The Opposition noted in a statement that the insurance industry can deduct, or offset, the VAT portion of medical bills against what it pays to the Government from taxes on client premiums.
The local insurance industry has voiced concern that come July 1st, they will not be able to claim VAT as an input deduction.
In a statement, East Grand Bahama MP Kwasi Thompson said: “This would have the effect of adding costs to Bahamian consumers already burdened with skyrocketing medical costs. The insurance industry has indicated that come July 1st, they will not be able to claim their VAT payments made in settling the medical claims of their customers.
“This revised ruling by the Ministry of Finance will mean that insurance companies will reportedly have to pass on these costs to the consumer. With some medical bills and procedures running into the hundreds of thousands of dollars, this will mean extreme hardship for Bahamian families at a time when they can least afford it.”
Thompson’s statement continued: “What is also extremely disappointing is that the Prime Minister as Minister of Finance had three opportunities to speak to the House of Assembly during the budget debate. At no time did he advise the public of the massive new costs that will be put upon the public.
“It is shameful that the government would try to sneak this on the Bahamian people. We call on the Prime Minister to meet with the stakeholders with a view to immediately reverse this heartless policy position. The government has already put VAT back on medicine. It is adding insult to injury to add costs to medical bills by virtue of a shift in this VAT policy.”
