In defence of the tax on tampons
Last week, the Chancellor of the Exchequer, Rishi Sunak, announced that the rate of VAT on sanitary products would be reduced from 5% to 0%, effectively scrapping what has commonly been referred to as the “tampon tax”. Back in November, Scotland became the first country in the world to make period products free for all. Far from being trivial, these decisions offer an interesting analysis from an economic point of view.
First of all, the idea that certain items should be free because they constitute a necessity is far from obvious. After all, food and water are not free and are much more vital than tampons. Ask any woman if she would rather give up food or tampons for one month and you will get a clear idea of what she considers a necessity. It could however be argued that these items should be cheap, and the reality is that they are. Sanitary products are extremely cheap relative to income: considering that the average yearly cost of period in the UK is £128 and that the median gross income of a woman aged 20-54 is £27,250, the cost of period accounts for less than half a percentage (0.47%) of income. That means that after paying for her sanitary products, the average British woman is still left with 99.5% of her income. Hardly an expense at all.
However, this is only true for women who earn an income. For the ones who don’t, the reality can be much more difficult. It has been said that 1 in every 10 women in the UK suffers from period poverty, hitting young women and teenagers the most. Making the product free or cheaper to all women may seem a tempting solution but isn’t economically sound. Indeed, why would the government make something cheaper for all if 90% of the population can afford it in the first place?
A parallel can be drawn with food: it has been reported that over 12% of the UK population suffers from a lack of food. The solution to that has not been to make food free or cheaper to every single person in the country, but rather to raise enough money to fund food banks for the people who struggle to eat sufficiently. Likewise, using income from VAT to help young women who cannot access sanitary products makes perfect sense.
If it is true that VAT is a regressive tax, with the cost falling mostly on the poor, its redistributive impact can be very efficient. In the case of tampons, a simple example proves the point. Let’s take 10 women, 9 rich and 1 poor, who buy tampons monthly at a cost of £1, inclusive of VAT at 5%. Let us assume that all the money collected is spent towards providing the poor girl with free sanitary products. After the first month, 50p is collected. At the end of the second month, £1 is collected, which allows the poor girl to receive a free pack of tampons. This means that for every 2 pack she buys, she gets 1 free, reducing the average price of a pack to 67p. If the VAT is scrapped entirely, each girl spends 95p on a pack of tampons, meaning the poor girl is 42% worse off, while the other 9 girls, who were able to afford the pack in the first place anyway, are only marginally better off.
What the anti-tampon tax advocates failed to realise is that the VAT was not put into place by some evil patriarchal organisation scheming to hurt women from every possible angle, it was there to help them. Indeed, proceeds from the tampon tax created a Tampon Tax Fund worth millions of pounds from which thousands of women across the country benefited, establishing an intergenerational support scheme between women of all income, race, and sexual orientation on a strictly, and intimate, feminine issue. What could be more feminist than that?
True, the fund was only established 5 years ago, and true, it wasn’t specifically targeted towards tackling period poverty. However, it has contributed a total of £47m towards charities working with vulnerable girls and women, addressing issues from domestic violence to ovarian cancer. Whether or not the women who stop paying VAT on tampons will contribute the same amount in donations to these charities is highly questionable.
On the contrary, what is more likely to happen is either the fund disappearing due to a lack of funding or it being maintained through another source of funding, possibly via an increase in income tax, in effect replacing one sexist tax for another. Indeed, just as much as the argument that the tampon tax is sexist as only women pay for sanitary products, then an increase in income tax would be unfair towards men who would end up paying tax on a product they would never have to use in their lifetime.
It is rather remarkable that the Government didn’t even bother explain the benefits of the Tampon Tax Fund. It seemed like the decision to scrap VAT was more of a precipitated attempt to give the public a tangent impact of Brexit on their day to day lives.
Being able to make free decisions about important aspects of fiscal policy such as VAT is a great novelty brought about by Brexit. Making hastened concessions to a group which will never consider the Tory party (and Brexit) as anything else than the prime personification of the patriarchy, while raising income tax, is not.
The anti-tax militants are right to point out the absurdity of the VAT system. The fact that more VAT has been applied to tampons than helicopters or crocodile steaks is unfair. If this change in legislation can be used as an opportunity to revive a conversation around VAT and the appropriate rates to be applied on different products and services, it is welcome. However, what is more interesting is that by criticising VAT these same militants have actually embraced a basic conservative principle: that ultimately the individual, and not the state, knows best how to spend his, or her, own money. Maybe the gap between feminists and conservatism isn’t unbreachable after all.
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