Budget may bring relief for cardiac and kidney patients

The upcoming national budget is likely to include tax reductions on cardiac stents, dialysis equipment and pharmaceutical raw materials in a bid to lower healthcare costs, alongside higher duties on tobacco and alcohol products aimed at increasing government revenue.

The proposals come amid rising healthcare expenses in Bangladesh, where patients continue to shoulder one of the highest levels of out-of-pocket medical spending globally.

According to the Bangladesh National Health Accounts, out-of-pocket expenditure has risen to over 70% of total healthcare costs, placing significant financial pressure on households.

Economists and health experts say the high cost of treatment, medicines and diagnostics is pushing many families into financial distress, increasing the urgency for tax relief on essential healthcare inputs.

Proposed relief on stents, dialysis equipment and pharma inputs

Sources at the finance ministry said the budget may withdraw the existing 10% value-added tax on coronary stent supplies in order to reduce the cost of cardiac treatment. The government is also considering removing the 7.5% advance tax on imports of kidney dialysis equipment.

In addition, several life-saving medicines not currently included in the duty-free list may be brought under tax exemptions. Tax incentives for investment in active pharmaceutical ingredients, a key raw material for the domestic pharmaceutical industry, may also be announced.

Officials said these measures are under consideration to make healthcare more affordable for ordinary citizens, although no final decision has been confirmed.

A senior finance ministry official, speaking on condition of anonymity, said, "The budget will include several proposals aimed at making healthcare more accessible for ordinary citizens."

Another official said duties on imports of certain pharmaceutical raw materials could be reduced, alongside potential tax exemptions to support investment in the active pharmaceutical ingredients sector. However, he declined to specify which items would be affected.

Earlier, during pre-budget meetings in March and April, National Board of Revenue officials indicated that the healthcare sector could receive targeted tax relief in the upcoming fiscal framework.

At present, a 10% VAT is applied to coronary stent supplies at local hospitals, a cost ultimately borne by patients. Prity Chakrobarty, chairman of Universal Medical College and Hospital, said removing this VAT could reduce stent prices.

She said coronary stents currently cost between Tk50,000 and Tk2,00,000 depending on type. Based on the highest price range, removal of VAT could reduce costs by around Tk10,000.

Prity added that eliminating advance tax on dialysis equipment imports could also help lower the cost of kidney treatment services.

According to the Directorate General of Drug Administration, at least 45,000 coronary stents are required annually in Bangladesh. A study published in December 2024 by the Bangladesh Institute of Development Studies found that patients undergoing regular dialysis spend more than Tk46,000 per month on average, with 93% of families facing financial hardship as a result.

Tobacco and alcohol duties may rise

Alongside healthcare-related relief, the government is preparing to raise tobacco prices through higher "sin taxes," with an estimated additional revenue target of Tk6,000 crore in the next fiscal year.

Currently, total revenue from tobacco products, including value-added tax and supplementary duties, exceeds Tk40,000 crore annually.

Officials said cigarette prices may rise across four tiers – premium, high, medium and low – with the government determining price tiers while collecting around 83% of the final price in taxes, including VAT, supplementary duty and health surcharge.

Under the ad valorem taxation system, higher retail prices directly increase government revenue.

Meanwhile, the budget may impose a specific VAT of Tk400 per litre on domestically produced liquor.

Debate over tax structure for cigarettes

Large tobacco companies had reportedly lobbied for replacing the ad valorem system with a specific tax structure, under which the government would set a fixed tax rate while companies determine retail prices.

However, a senior National Board of Revenue official, speaking anonymously, said internal analysis showed that such a shift could reduce revenue by around Tk4,000 crore.

"We have calculated that under their proposed formula, revenue would decrease by nearly Tk4,000 crore rather than increase. Therefore, the likelihood of adopting a specific tax system is low," the official said.

Under a specific tax system, companies could potentially adjust prices to maximise profits, a concern also raised by some experts who argue that it may reduce the government's ability to capture revenue growth through price adjustments.