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EDITORIAL ANALYSIS

Why the UK’s decision to abolish the ‘tampon tax’ is significant?


The Editorial covers GS paper 3 [Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.]

Tampon Tax Abolished In The UK After Years Of Campaigning

Context

  • The UK began 2021 by abolishing a 5 per cent Value Added Tax (VAT) on women’s sanitary products, often referred to as the “tampon tax” and which many activists had described as sexist. 

  • It now joins the list of countries which have already eliminated this tax, which includes India, Australia and Canada. 

What is the Background?

  • The measure had been promised by the British Chancellor of the Exchequer (equivalent to finance minister) Rishi Sunak in March last year, and is part of a wider UK government effort called ‘End Period Poverty’. 

  • Announcing the tax’s removal, Sunak said, “I’m proud that we are today delivering on our promise to scrap the tampon tax. Sanitary products are essential so it’s right that we do not charge VAT.” 

What is “tampon tax”?

 

  • Until December 31, the UK was a part of the EU, where period products such as sanitary napkins and tampons are classified as non-essential, and member states are required to levy a 5 per cent tax on them. 

  • Now that the UK is out of the 27-member bloc, it is not bound by its directives, under which sanitary products had been subjected to five different VAT rates since 1973– with the lowest 5 per cent slab being applicable since 2001. 

  • The removal of the tax has thus been praised by women’s right activists and Brexit proponents at the same time. 

  • According to the BBC, the EU itself has been in the process of removing the tax on period products. In 2018, the bloc published proposals to change the tax rules, but these are yet to be accepted by all members. 

  • In the Republic of Ireland, however, there is no VAT on such products despite the country being an EU member. 

  • This is because Ireland’s tax rates were in place before the EU imposed its own tax laws, the report said. 

  • Scotland, which is a part of the UK, made history in November 2020 by becoming the first country in the world to make period products free of cost to those who need them. 

What is the movement against tampon tax?

  • In 2001, the British government led by the Labour Party – which currently sits in the opposition– had moved sanitary products to the 5 per cent tax slab, which was the lowest possible rate under EU regulations. 

  • Then in 2015, the Conservative Party government led by former Prime Minister David Cameron established a ‘Tampon Tax Fund’ which allocated the funds generated from VAT on period products to projects supporting vulnerable women and girls. 

  • As per a government website, the UK has so far donated 47 million pounds to charities from the VAT collections since then. 

Conclusion

A year later, a zero tax rate was legislated for allowing the UK to bring in a change in its tax regime once it could do so under its legal obligations. The British government has estimated that the move to abolish the tampon tax would save the average woman about 40 pounds during her lifetime – as a pack of 20 pounds will be cheaper by around 7 pence and 12 sanitary pads by 5 pence. 

Source: Indian Express.