This year, the foundation is running at a deficit of 150,000 euros – which is almost equal to how much the government has profited from us! 

By the end of 2020, the foundation will have ‘supported’ the Estonian government with almost a million euros – this sum having been collected purely from the donations of Estonian people and companies and paid into the State Treasury over the last seven years as VAT on medications.

‘The Gift of Life’ has been approached by a record number of cancer patients who have been left helpless by the Health Insurance Fund: 28 people in May and 24 in June, even before midsummer. The large sums in support contrasted against fewer donations caused by the COVID-19 crisis have left the foundation running at a deficit of around 150,000 euros.

At the same time, ‘The Gift of Life’ has been forced to pay 120,000 euros from all of the donations received to the government as VAT on medications.

“This situation is so bizarre that the words stick in my throat,” says Toivo Tänavsuu, the head of the cancer treatment foundation. “We raise donations one or five euros at a time and organise countless campaigns and actions with our volunteers over the course of the year,

but when it’s time to buy life-saving medications that the country doesn’t provide for its cancer patients through health insurance, we’re forced to give 9% of the donations to the government as VAT.

The strong arm of the Taxation Act has stripped us of around 120,000 euros this year – an amount comparable to all of the donations we raised in May. Essentially, we’ve given our entire proceeds for the month of May to the government.”

Tänavsuu says that the foundation has been extraordinarily lucky and privileged to have so many kind-hearted and generous donors and to be able to support every cancer patient who has turned to the foundation for help and who forms part of its target group. “That our government is profiting off of those donations is cynical and unfair,” he adds.

Numbers to make you think:
– In 2020, the cancer treatment foundation has received around 1.2 million euros in donations. ‘The Gift of Life’ has paid around 1.35 million euros in medical bills, of which 120,000 euros has been paid to the government as VAT.  
– In May, the foundation received a total of 107,000 euros in donations. The amount of donations was relatively modest because the COVID-19 crisis negatively affected a large number of Estonian people and entrepreneurs.
– In 2019, the foundation paid 2.7 million euros in medical bills and the government received 240,000 euros through VAT.
– In 2018, the foundation paid 2.5 million euros in medical bills and the government received 225,000 euros through VAT.
– In 2017, the foundation paid 1.35 million euros in medical bills and the government received 121,500 euros through VAT.
– From 2014-2016, the foundation paid around 1.4 million euros in medical bills and the government received 126,000 euros through VAT.
– With the million euros we have given to the government over the last seven years we could have treated at least half of all Estonian cancer patients whose treatment is not covered by the Health Insurance Fund.

Allowances awarded to the foundation by the government:
– An operating grant of 90,000 euros was awarded to the foundation in the 2018 Annual State Budget.
– An operating grant of 115,000 euros was awarded to the foundation in the 2019 Annual State Budget.
– An operating grant of 20,000 euros was awarded to the foundation in the 2020 Annual State Budget.
– The government’s support forms around 2% of the foundation’s revenue; the remaining 98% consists of private donations.

The foundation has been drawing people’s attention to the VAT issue for years. In private conversations, ministers from several governments have recognised this injustice, but nobody has sought to actually solve the problem. “There’s been a lot of empty rhetoric, and that will no doubt continue,” says Tänavsuu.

Oskar Lepik, the head of communications at the Ministry of Social Affairs, has said the following:

“Policies concerning VAT are the responsibility of the Ministry of Finance: the Ministry of Social Affairs has no jurisdiction where they are concerned. In addition to donations, VAT on medicines, medical instruments and supplies affects the Health Insurance Fund and healthcare facilities as well. A lower VAT rate would enable everybody to afford more medication.
We support lowering the VAT on all medication to 5% instead of 9%, as it was before 2009, or even lower.
When deliberating whether to grant exemptions from or compensation for VAT for medication purchased using donations, the bigger picture should be taken into account. Other organisations receiving help from donations are in the same situation, so the plan should include other goods and services in healthcare and other areas as well.”

Minister of Finance Martin Helme has stated:

“To encourage charity and to contribute to the activities of charitable organisations, the government today supports foundations through income tax credit – either income tax exemptions (for companies and other corporate bodies) or returns (for natural persons). ‘The Gift of Life’ is on the list of NPOs and foundations with income tax credit.
Both myself and our party greatly appreciate the activities of ‘The Gift of Life’ and the help you provide to people. As you know, that support isn’t only expressed in words. In the last few years, EKRE has made a financial contribution in support of your activities through discretionary funding.
As the Minister of Finance, I would say that VAT is an objective tax, one that is paid on a product or service; where the money came from to buy it is unimportant. Medication is paid for by individuals and the Health Insurance Fund alike, and in both cases they pay 9% VAT. Unlike quite a few of my predecessors, I am not categorically against tax exemptions or favouring one field or another by implementing them, but thorough analysis is required in order to make such exemptions. Collecting VAT is one of the biggest sources of income for the government and covers social expenses.
As I see it, the way allowance funds are distributed today isn’t always right or just. To offer better support to those in need and to organisations that truly help them, in my eyes, it is very important and very much necessary to check who the government is issuing allowances to and why. EKRE has repeatedly raised questions about the distribution of government allowance funds and I sincerely hope that our coalition partners are ready to discuss the issue seriously in the near future.”