Tampons and tax avoidance on the high street

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If you are in the UK shopping at Boots the Chemist you are likely a woman (around 70% – 80% of Boots’ customers are female).  Baby products, domestic healthcare products, beauty products: these are all targeted at women, in the roles that we are expected to adopt as mothers, domestic goddesses and sex objects.  A small number of the products are VAT-free but most of them are not, which means that (however low our income) tax is collected from us by virtue of the money we spend on them.  VAT is, in theory, not applicable to essentials, but many of these so-called non-essentials are hardly luxuries. Few UK mothers would want to be without things like sticking plasters and baby wipes. Few UK women would view tampons as a frivolous ‘luxury’: does the government expect us to use rags instead? The price you pay for these things is marked up by 20% (although VAT on sanitary products was cut to 5% in 2001, in line with EU regulations, after years of campaigning for a zero rate) – whether you are the daughter of an oligarch or a single mother in a minimum wage zero-hours job.  20% added to the price of a cheap eyeliner or some sticking plasters may not be much, but with millions of these transactions taking place every day, the amounts add up.

You would probably expect some of your spending in Boots also to represent Boots’s profit margin, and you would be right: Boots is a highly profitable business.  And you would also probably expect that profit margin to be properly taxed, so that Boots’ business bears its fair share of society’s costs (benefiting as it does from the UK’s infrastructure and healthy educated workforce, for example).  In this you would be wrong.  In fact Boots’ profits are heavily subsidized out of public money; out of the money you pay in tax.  How does this work?  It works because Boots was bought out in 2007 via an offshore structure using borrowed money, and Boots gets a UK tax deduction for the interest paid on that borrowed money.  What used to be UK taxable profits became a financial flow leaving the UK untaxed, by virtue of nothing more constructive and socially useful than Boots getting a new owner.

The UK government likes to think of this kind of thing as “investment” and that is why these transactions benefit from generous tax breaks, but in fact it is the opposite of investment into the UK – it is moving profitability offshore, out of any country’s tax net.  The state wants to attract big money but the only thing it has to offer in exchange is skewing its tax system in favour of that big money, thereby defeating the purpose of attracting the money to the UK in the first place.

Deliberate shortfalls in the tax system have to be made up from elsewhere, and that is where the VAT paid by shoppers at Boots come in.  The whole system is in effect a massive forcible transfer of wealth from millions of not-so-well-off women in the UK to the billionaires who run the private equity firm that bought Boots out.  Those billionaires make a profit out of you, and at the same time the state takes extra money from you in order to provide them a little extra sweetener as a reward for profiting from you, even though they are already vastly wealthier than you.  And neither of them looks like they ever felt the need to wear make-up to a job interview.

These men and their investment partners are in the process of exiting their position in Boots, and while we bid them a hearty good riddance, the tax break they have been benefiting from will continue to benefit Boots’ new owners (Walgreens), who appear to be buying it as part of a structured transaction to avoid gigantic amounts of US tax.

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Why tax justice is a feminist issue

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Globally, women are more likely to live in poverty than men. They are paid less, they own less, they do more work overall, and poverty and discrimination increase their exposure to the risk of violence. At the same time, poor women and girls bear the brunt of the government spending cuts that are taking place in developed and developing countries alike. In most cases, these spending cuts could be avoided altogether were governments to take strong measures to tackle tax abuse by corporate entities and the wealthiest in society, or commit to taxing them at higher rates.

Instead, both powerful corporations and wealthy individuals put pressure on States to reduce their own tax burden in the name of “efficiency” and “competition”, and to perpetuate a global system in which international financial flows, massive profits and huge personal fortunes are allowed to escape tax. Meanwhile, governments turn to workers and consumers to generate public revenue. The result is that giant amounts of corporate income – and the wealth of the 1% – accumulate untaxed and in tax havens, while rich and poor countries alike struggle to provide for their populations’ basic needs.

These are policies whereby, in effect, the poor subsidize the rich. Since the asset-owners and shareholders of the global North are predominantly men, and the global poor are predominantly women, these mechanisms essentially represent a massive global transfer of wealth and power from women to men. Millions of women around the world have little choice but to sell their time and labour for meagre wages; and while their labour and consumption is taxed, the corporations and financiers who ultimately make vast profits from their toil pay little or nothing into the public purse. Schools, hospitals, roads and energy infrastructure – and other goods and services essential for human flourishing and for progress towards gender equality – remain inadequate and under-financed.

At the national level, studies across different countries have shown that women bear a disproportionate share of overall tax burdens, while government expenditure tends to privilege men. The benefits of tax cuts for corporations and high earners largely bypass women, while they feel the brunt of regressive VAT/consumption taxes, as women tend to use larger portions of their income on food and basic goods for the household – because of gender norms that assign them responsibility for the care of dependents. Indeed, tax policies themselves play a crucial role in entrenching these social norms, tending to be based on an outdated sexist ‘male breadwinner’ model. So, as well as direct effects on women’s income, tax policies enshrine social norms and gender stereotypes that are profoundly discriminatory and constrain women’s opportunities, political voice and progress towards equality.

Over the last three decades politicians in most countries have substituted regressive consumption taxes (e.g. VAT) for wealth, income and corporation taxes. This has reversed the largely successful progressive tax policies of the previous half-century, worsening inequality and substantially impacting the expenditures of poorer households. Women have born the brunt of this reversal. Combined with the gendered impacts of government spending cuts that have created more unpaid work for women while slashing their benefits, in many countries poor women’s resources, time, health and coping abilities are being stretched to breaking point – with those who experience additional forms of discrimination (on the basis of e.g. race, ethnicity, sexual orientation or national origin) often suffering most.

Therefore, national and international tax systems entrench patriarchal power structures in the economy, in public life, and in the home – making women’s full economic equality a mirage under the current tax status quo. Tax justice should be firmly on the agenda of the women’s movement; while equally, gender inequality should be a core concern of tax justice advocates.