title: Handling value added tax (VAT) in economic evaluations: should prices include VAT?
abstract: In health economic evaluations, value added tax is commonly treated as a transfer payment. Following this argument, resources are valued equal to their net-of-tax prices in economic evaluations applying a societal perspective. In this article we argue that if there is the possibility that a new healthcare intervention may expand the healthcare budget, the social cost of input factors should be the gross-of-tax prices and not the net-of-tax prices. The rising interest in cost-benefit analysis and the use of absolute thresholds, net benefit estimates and acceptability curves in cost-effectiveness analysis makes this argument highly relevant for an appropriate use of these tools in prioritisation.
authors.affiliation: University of Southern Denmark, Institute of Public Health, Odense, Denmark. mbe@sam.sdu.dk
authors.forename: Mickael
authors.initials: M
authors.lastname: Bech
authors.forename: Terkel
authors.initials: T
authors.lastname: Christiansen
authors.forename: Dorte
authors.initials: D
authors.lastname: Gyrd-Hansen
mesh_terms: D003362:Cost-Benefit Analysis; D003695:Delivery of Health Care / Q000191:economics*; D003718:Denmark; D005249:Fees and Charges; D017059:Models, Econometric; D013660:Taxes