Dept: No 5% rise in healthcare costs

From 2010 to 2014, premium rate increased by an average of 12% per year, driven by high inflation in healthcare costs. This was revealed in a joint statement by three insurance associations

PETALING JAYA: The Customs Depa­rt­­ment has dispelled talk that private healthcare charges would rise by 5% with the Goods and Services Tax (GST), saying that it is expected to go up by just between 1% and 2%.

“The statement on the increase in healthcare costs by 5% is not only incorrect but is creating panic and confusion among patients,” Customs director-general Datuk Seri Khazali Ahmad said.

On Monday, Association of Private Hospitals Malaysia (APHM) president Datuk Dr Jacob Thomas said that Malaysians would need to pay at least 5% more for private healthcare when GST starts in April next year.

He cited factors such as hotel operating costs, which were expected to increase from outsourced services that are taxable like security, laundry and housekeeping.

Also, he said most private doctors operate as “independent consultants” whose work is deemed by the Customs Department as an “outsourced service” that could be taxed.

However, Khazali said in a statement yesterday that although the services of contractor specialist doctors liable for GST, healthcare services costs were expected to rise by just between 1% and 2%.

He said room charges and food provided at private hospitals were now liable for a 6% service tax but that the tax would be scrapped as both items did not come under GST.

Room charges usually comprised 10% to 30% of the total costs borne by patients, so the savings must be channelled back to them, he said.

Khazali noted that medical supplies such as gloves, beds and hospital equipment were currently liable for a 10% sales tax but all these would only be imposed a 6% GST later, which would result in savings.

“No GST would be imposed on wages and benefits,” he added.

A total of 2,900 medicines have also been listed as zero rated for GST.

Negotiations are being carried out between the Customs Department, Health Ministry and Finance Ministry to widen the (zero rate) coverage for medicines, he said.

Meanwhile, the Finance Ministry posted on its Facebook yesterday that customers would have to pay extra for certain banking services under the GST.

Service charges by banks will be subjected to GST, the ministry said, citing the MEPS charges.

For example, if a Maybank cardholder withdraws from a CIMB ATM, and the MEPS charge is RM1, the GST rate will be RM0.06.

The actual amount withdrawn would not be subjected to the GST, the ministry said.

According to the GST website, customers would be charged GST on fees for cheque books, on provision of bank statements, loan processing, standing instruction services and maintenance services in relation to buying and selling of shares.

While GST applies to the fees imposed, the actual amount involved in the transaction such as the amount withdrawn and the interest paid for loans will not be affected by the tax.