Fair taxation for health for all

By Maria Zuniga

El Salvador, a small country in Central America, is an outstanding and unique example of the commitment of a government and Ministry of Health (MoH) to the strategy of Primary Health Care and Health for All. With the election of the government of President Mauricio Funes from the Farabundo Marti Front (FMLN) in 2009, civil society developed a program and road map for the health sector aimed at “Building Hope 2009-2014” (Construyendo la Esperanza). Following the direction of this program, a new health policy was published in February 2010 and launched a unified health system with universal access, based on comprehensive primary health care (PHC) and broad community participation. The fourth edition of Global Health Watch includes a chapter on the Salvadorian health reforms under the name of Social Change in El Salvador and the Right to Health.

One of the pillars of the reform is the National Health Forum (Foro Nacional de Salud, FNS), as the channel to institutionalize the participatory process of the reform. The Forum was established in 2010 as a broad-based platform of grass-roots groups and civil society organizations from El Salvador that promotes the right to health and strives for ensuring equity of access and social solidarity. The Forum incorporates an analysis of social determinants as a key component of its approach. It constantly advocates for responding to people’s needs by exercising social oversight on the health system, and defending and strengthening the achievements of the new health reform. It is one of the most innovative and exciting component the new health reform in El Salvador.

The initial phase of development of the Forum focused on developing and building the capacity of ‘community-based health committees’. It did so by holding national-wide consultations and policy dialogues around key issues of national concern such as legal protection of universal access to medicines and social audits of public health facilities. By 2012, the Forum reached out to 450 community councils, in 62 municipalities of the 14 Departments of El Salvador. The Forum advocates defending the right to health for all Salvadorian through promotion of a national health system that strengthens the public sector and effectively regulates the private sector. The Forum’s vision incorporates all the components of PHC including health promotion, prevention, curative care and rehabilitation. It also includes the principles of safe environment, timely responsiveness, equity and universal access to quality care for all. In many aspects, the Salvadorian health reforms are in line with PHM’s ideas and ideals.

The Forum has been part of many successful struggles. It was instrumental in pressurizing the judicial system to ensure that the medicines law that caps the price of medicines on the market is implemented, and the legal validity of the law be upheld (lobbies of pharmaceutical companies and medicines’ importers had been demanding that the medicines law be declared unconstitutional). The Forum played a key role in rallying various voices from people’s organizations and staged several protests in front of the Constitutional Court in San Salvador.

Today, one of the key struggles of the Forum will be for financial reforms. The reform has seen stunning advances in health outcomes, such as reduction in maternal mortality from 56 per 100,000 in 2009 to 38 per 100,000 live births –below the MDG5 target of 50 per 100,000 live births. However, these advances have been achieved with limited increases in budgetary allocation. MoH spending stood at 2.2% of GDP in 2009 and only increased to 2.6% of GDP in 2013. Positive health outcomes will be limited if government’s health expenditure remains stagnant. However, despite political will, revenue collection is limited by an unfair tax structure, inherited from the previous governments’ policies. It depends on indirect taxes that provide 60% of the government’s income. Households contribute 80% of government revenues, while big business, which captures most of the national income, provides only 20% of government revenue from taxation. In addition, tax evasion is a serious problem in El Salvador. According to the Minister of Finance, Carlos Cáceres, in 2013 tax evasion was of 28%. That year the government collected US$ 3.746 million of tax revenue and lost US$ 1.049 million. Another challenge is the existence of 26 laws that allow large companies to avoid taxes, such as the law related to free trade zones. The Budget Analysis and Monitoring Unit of the Legislative Assembly reported that these laws allowed legalized tax avoidance equivalent to US$9.035 million between 2001 and 2009, i.e. $1.003 million per year.

Securing financial resources for the government out of a fairer tax structure could allow for expanded investment in health and bring the Salvadorian population closer to realizing the right to health. The Forum has taken this area as one of its priorities for 2015 and will intervene and advocate for comprehensive tax reforms and increased funding for health care.

To those of us who are active in PHM in Latin America and globally, it is very exciting that the leaders of the Salvadorian health reform, in the MoH and in the coordination of the Forum, are long time PHM activists. Their strong commitment to equity and justice is an example to activists in similar situations, across the world.