With people still adjusting to their insurance policies and premiums under the Affordable Care Act, now might not be the ideal time to tell Virginians that sales taxes associated with some health procedures, prescriptions, and even Band Aids could be passed on to them. But that was one of the issues the Joint Subcommittee to Evaluate Tax Preferences.
Virginia's tax code offers exemptions on items such as contact lenses and hypodermic syringes—when sold to medical practitioners. But as Charles Kennington, an economist with the Virginia Department of Taxation says state absorbs the costs that aren't passed on to taxpayers.
Also, state tax officials say it's a significant administrative burden to determine which items are tax-exempt and who is eligible for specific exemptions. For now, the subcommittee has elected to continue with the current exemptions because the state does get money from the federal government through Medicaid. And much of the revenue earned by collecting taxes on medical items would be offset by the Medicaid funding that would be cut.