PESHAWAR, March 23: The imposition of general sales tax on medicines would hit the poor people hard as they were already unable to buy drugs in view of the skyrocketing prices of the commodity, doctors and medical store owners said here on Friday.

Reacting to the levy of 15 per cent GST on all medicines, including life-saving drugs through the promulgation of Sale Tax Amendment Ordinance, 2002, the doctors said the patients would suffer tremendously because they were already burdened under inflation.

“As the ordinance comes into effect immediately, we have started charging an additional 15 per cent from buyers,” said a pharmacist near Khyber Teaching Hospital.

According to him, recent hike in drug prices would prove to be more beneficial to multinational companies as they hold 90 per cent of market for life-saving drugs.

The decision had been taken on the instructions of the IMF, he said, adding that all over the world life-saving drugs were sold without any levy but here the government was following the diktat of the monetary agencies at the cost of the poor people.

The druggist expressed the fear that since all sorts of medicines were available in neighbouring countries like Iran and India on almost 400 to 1000 per cent cheaper rates, the levy of 15 per cent GST would pave the way for smugglers to pump smuggled drugs into the Pakistani markets and the government would suffer heavy losses in revenue collection from drug sale.

“We would not get any benefit from the GST because we would shift it to the consumers. For instance, a drug that was being sold at Rs100, would now be sold at Rs115,” said another chemist. But the common people would be at razor’s edge, he remarked.

The government also announced that the import duty on raw materials had been decreased from 10 per cent to five per cent which would provide relief to the consumers, but the chemists argued that the decrease was negligible and the prices of drugs would not change much.

They also argued that the rates of petrol, electricity, gas, telephone, packing and printing materials were so high that the real impact of the increase would be 18 per cent instead of 15 per cent.

“The government’s claim to spend the amount of Rs5 billion collected annually from the GST on medicines, on the betterment of people by diverting it into health budget from the next fiscal year also holds no truth. The people have been paying Iqra surcharge meant for education for the last 30 years. Where is that huge amount of Rs84 billion collected from the poor people in all these years?,” said a professor of economics at the University of Peshawar.

It would be in the fitness of things had the government imposed the GST on fashion drugs, including hormones, vitamins, tranquillisers and aphrodisiacs, said a pharmacist, adding that the European countries had imposed GST on fashion drugs which had reduced the use of these drugs from 3.5 per cent to almost one per cent there. He said there was no GST on drugs except for fashion drugs the world over.

There was also an ambiguity regarding the imposition of fresh levy because the government wanted to impose it on manufacturers, wholesalers and retailers, said an economist. He said if the levy was imposed in the first stage on manufacturers and then shifted the same to the wholesalers and retailers, was workable. But its imposition on multiple stages would be a failure, he maintained.

“The government has backtracked as previously it was stated that the new levy would be applicable from April 1, and life-saving drugs would be exempted from it, but now the situation is quite opposite.

“The GST has been levied with immediate effect and the life-saving drugs have also been included,” he said, adding that it was a gimmick of World Trade Organisation’s regulations of free market phenomenon which would further harm the poor people in this part of the world.

Another ambiguity which needs to be clarified is that the 15 per cent GST has been imposed on registered outlets, whereas the unregistered ones have to pay 18 per cent, he said. According to him, it would take more than a year to get the unregistered drug-sellers registered and there would be a lot of hassles between the unregistered drug sellers and tax collectors.

According to the pharmacists, there was some 26,000 registered drugs in Pakistan, while the number of available drugs in local markets was above 50,000.