The PR nightmare of the ‘tampon tax’
29 August 2018
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Lifestyle Economics
Brexit
Government and Institutions
Political classes on both sides of the Channel are waiting patiently for the end of the EU Parliament’s recess, and for Brexit negotiations to resume in earnest. Stakes are high on all sides but, in one way, uniquely so for women in Britain, given that any changes to the controversial 5% levy on sanitary products must remain at a standstill until negotiations have concluded.
Back in January, it emerged that reforms to EU law allowing the UK to apply a 0% rate on tampons would not come into force until January 2022 at the earliest – meaning that British women will be forced to pay the hated ‘tampon tax’ for at least another three years. Tampons currently (and controversially) fall under the 5% VAT required by the EU.
However, in the face of mounting public concern and several high-profile PR campaigns, patiently waiting for change may no longer be an option.
‘Period poverty’ refers to the inability of girls and women to pay for sanitary products, which, in worst-case scenarios, can result in young women having to skip school to avoid the humiliation and stigma associated with periods. In the UK alone, the charity Plan International reports that more than 135,000 girls have missed a day of school due to difficulties purchasing sanitary products.
With inaction from government, private enterprise is taking matters into its own hands. Sanitary product supplier, Always, launched their #EndPeriodPoverty campaign in March 2018, which donates a pad for every pack purchased. In recent months, supermarket chains Tesco, Morrisons, and Waitrose have decided to bear the costs of this levy themselves by lowering prices rather than passing on VAT costs to consumers.
The failure of UK politicians to abolish tampon taxes during the last two years – despite it being a deeply unpopular policy, and a stated aim of most major political parties – is a measure of bureaucratic obstacles in our current legal system. But the tampon tax, and growing public awareness of it, has also exposed the ineffectiveness of the European Parliament, and other EU member states, in levying VAT.
For instance, the tax raises the price of feminine products to a legal minimum of 5%, which is what the UK currently levies, but in countries such as Germany, and Italy, the figure is as high as 19%. Due to various historical and legal anomalies, only Ireland and the Canary Islands have managed to evade these requirements. Though political resistance to the ‘pink tax’ in the EU Parliament in 2015 and 2016 resulted in the freedom to lower the VAT on sanitary products to 5%, an action taken by both France and Britain, many other European countries have failed to reduce the tax.
For all the controversy it generates, the ‘pink tax’ does not appear to be a vital source of revenue to any developed nation. Canada, for example, removed its tax on sanitary products in 2015. While tampon tax revenue brought in $36,398,387 in 2014, the total VAT revenue increased by $5,908,000 in 2016, even without tampon tax revenue. Although total revenues from VAT taxes make up 7% of the EU’s GDP, only a fraction of this comes from sanitary products.
Yet despite its insignificant effect on the balance sheet, the tax remains burdensome enough to impact the lives of thousands of girls. Its negative effects on women are well established around the world, such that it has even been abolished in some developing countries, like India and Nigeria. As we have seen, the existence of this unpopular levy represents a continued reputational headache for lawmakers in the developed world as well.
It may seem like a small thing, but abolishing the punitive taxation of this far from luxurious product would clearly demonstrate an EU-wide commitment to promoting gender equality.
Editor’s note: A previous version of this blog implied that the EU classes tampons as a ‘luxury’ item, when in fact it stipulates a 5% VAT rate on sanitary products.
Back in January, it emerged that reforms to EU law allowing the UK to apply a 0% rate on tampons would not come into force until January 2022 at the earliest – meaning that British women will be forced to pay the hated ‘tampon tax’ for at least another three years. Tampons currently (and controversially) fall under the 5% VAT required by the EU.
However, in the face of mounting public concern and several high-profile PR campaigns, patiently waiting for change may no longer be an option.
‘Period poverty’ refers to the inability of girls and women to pay for sanitary products, which, in worst-case scenarios, can result in young women having to skip school to avoid the humiliation and stigma associated with periods. In the UK alone, the charity Plan International reports that more than 135,000 girls have missed a day of school due to difficulties purchasing sanitary products.
With inaction from government, private enterprise is taking matters into its own hands. Sanitary product supplier, Always, launched their #EndPeriodPoverty campaign in March 2018, which donates a pad for every pack purchased. In recent months, supermarket chains Tesco, Morrisons, and Waitrose have decided to bear the costs of this levy themselves by lowering prices rather than passing on VAT costs to consumers.
The failure of UK politicians to abolish tampon taxes during the last two years – despite it being a deeply unpopular policy, and a stated aim of most major political parties – is a measure of bureaucratic obstacles in our current legal system. But the tampon tax, and growing public awareness of it, has also exposed the ineffectiveness of the European Parliament, and other EU member states, in levying VAT.
For instance, the tax raises the price of feminine products to a legal minimum of 5%, which is what the UK currently levies, but in countries such as Germany, and Italy, the figure is as high as 19%. Due to various historical and legal anomalies, only Ireland and the Canary Islands have managed to evade these requirements. Though political resistance to the ‘pink tax’ in the EU Parliament in 2015 and 2016 resulted in the freedom to lower the VAT on sanitary products to 5%, an action taken by both France and Britain, many other European countries have failed to reduce the tax.
For all the controversy it generates, the ‘pink tax’ does not appear to be a vital source of revenue to any developed nation. Canada, for example, removed its tax on sanitary products in 2015. While tampon tax revenue brought in $36,398,387 in 2014, the total VAT revenue increased by $5,908,000 in 2016, even without tampon tax revenue. Although total revenues from VAT taxes make up 7% of the EU’s GDP, only a fraction of this comes from sanitary products.
Yet despite its insignificant effect on the balance sheet, the tax remains burdensome enough to impact the lives of thousands of girls. Its negative effects on women are well established around the world, such that it has even been abolished in some developing countries, like India and Nigeria. As we have seen, the existence of this unpopular levy represents a continued reputational headache for lawmakers in the developed world as well.
It may seem like a small thing, but abolishing the punitive taxation of this far from luxurious product would clearly demonstrate an EU-wide commitment to promoting gender equality.
Editor’s note: A previous version of this blog implied that the EU classes tampons as a ‘luxury’ item, when in fact it stipulates a 5% VAT rate on sanitary products.
2 thoughts on “The PR nightmare of the ‘tampon tax’”
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I am not really sure why there is support amongst free-marketeers for taxes levied at differential rates on different products. Generally, the iea position has been lower, non-discriminatory taxes with no exemptions and where there is poverty for that to be dealt with by cash transfers.
With respect, VAT on tampons is hardly a significant contribution to poverty. If it was abolished it would save the average menstruating woman in the UK less than £7.50 a year.
A couple of points:
1. Whatever the merits of this particular case, tax economists would generally argue that with a tax of this kind it is best to have as few exemptions as possible in order to minimise distortions in spending patterns and reduce bureaucratic complexity.
2. The author seems to have bought into the ‘period poverty’ story. This. like ‘fuel poverty’ ‘food poverty’ and so on is a poor guide to policy. If people are poor we should aim to boost their income and allow them to spend it as they wish, rather than subsidising particular products or providing them for ‘free’, as various pressure groups argue. I blogged on this a few weeks ago:
https://iea.org.uk/free-stuff-isnt-the-answer-to-poverty/