Venezuelan Supreme Courts Overturns Value-Added Tax on Health

Caracas, May 19 (<a href=quote.bloomberg.com>Bloomberg) -- Venezuela's Supreme Court overturned a government decision to charge value-added tax on private medical costs, which may widen the budget deficit as federal revenue declines.

The Supreme Court ordered an injunction on collection of the tax on private surgical, dental and hospital expenditures, saying it violated individual rights. The 8 percent tax went into effect Jan. 1 as part of a government plan to increase revenue.

``This constitutes a real threat to (an individual's) right to health,'' Supreme Court Chief Justice Ivan Rincon said, announcing the decision.

The injunction is a setback to government efforts to narrow the deficit, which some analysts estimate will be as high as 5 percent of gross domestic product this year amid an 18 monthlong recession. The Venezuelan economy may contract 17 percent this year after a strike choked off oil exports, according to the International Monetary Fund.

Venezuela has already reduced its estimates on non-oil tax revenue by about 900 billion bolivars for the year ($563 million) to 13.4 trillion bolivars. Last Updated: May 19, 2003 16:07 EDT