The Tempestuous Tampon Tax — Wacky Tax Wednesday
Update 7.22.2016: The list of U.S. states that exempt feminine hygiene products is growing. New York Governor Andrew Cuomo has signed the legislation exempting feminine hygiene products from state and local sales taxes, calling it “a regressive tax on essential products that women have had to pay for far too long.” He added that “lifting it is a matter of social and economic justice.” The exemption is set to take effect on October 1.
Last summer, it came to light that while tampons are subject to value added tax in Great Britain, exotic meat, edible cake decorations, men’s razors, and a handful of other curious items are exempt. The news caused a bit of uproar — at least in some circles. Now Australia finds itself in a similar pickle.
In Britain, tampons are subject to a reduced VAT rate of 5%, which suggests that the British government considers them to be essential. The reduced rate would likely have placated the masses had no one noticed that crocodile meat, etc., is altogether exempt. The facts suggest that folks behind the tax law either a) think that crocodile and horse meat are more essential than tampons or b) have close relations in the exotic meat business.
In Australia, a number of items are exempt from the 10% goods and service tax (GST) because “they are classed as important health goods.” These include the following:
- Nicotine patches
Tampons and other feminine hygiene products, however, are subject to the 10% GST.
On the spot
University student Subeta Vimalarajah thinks the government should reconsider the current tax policy towards tampons. To that end, she created an online petition calling for an end to the tax on a “bodily function” and a removal of the tax on pads and tampons. Close to 90,000 people have signed it.
She then brought the issue to the attention of Australian treasurer Joe Hockey during a televised Q&A discussion, in the form of a video featuring a giant tampon:
She asked the treasurer, “Do you think that sanitary products are an essential health product for half the population?”
Mr. Hockey replied, with a bit of a blush, “I think so.”
The treasurer then said that the GST “probably should” be taken off sanitary products and promised to raise the issue with the states next July. He would need the support of the states to exempt feminine hygiene products (ABC News).
In the immediate aftermath of the televised conversation, many politicians spoke out in support of the exemption. Queensland Deputy Premier Jackie Trad said, “I think it should be lifted.” Shadow Treasurer Chris Bowen also expressed his support, saying, “These are in effect health products and aren’t simply a matter of choice for women.” And a spokesman from the consumer group Choice pointed out that the “original agreement was that the GST would not apply to any essential items.”
Prime Minister Tony Abbott was more cautious in his remarks on the matter, saying that exempting feminine hygiene products from the GST is “certainly not something that this Government has a plan to do.”
However, he admitted that he can “fully understand” why people support such an exemption. He said, “There’s long been a push to take the GST off goods which are one way or another regarded as health products,” and he added, “
[P]erhaps if we had our time over again things would have been done differently.”
While his government isn’t planning on actively pursuing the matter, the prime minister did acknowledge that if there is strong state support for the idea, “obviously we’d be happy to be accommodating. If the states decide that they’d prefer to forego the revenue, then let it be” (Bloomberg).
Petitions can be persuasive. After receiving a petition similar to the one presented to the Australian treasurer, the Canadian government moved to remove “the GST on feminine hygiene products, including tampons, starting July 1 .” This will cost the government approximately $36 million (CBC). And a similar petition in Malaysia inspired a drop in prices for certain sanitary products, though not a reduced tax rate (Malaysia replaced its sales and service tax with a GST on April 1, 2015. When Bintulu MP Tiong King Sing questioned whether or not feminine hygiene products should be subject to the new GST, he was met with laughter).
We’ll all just have to wait and see what happens Down Under. Yet the states do have a compelling reason to reject the idea; according to Deloitte Access Economics, exempting feminine hygiene products would cost states $30 million annually in GST revenue.
Tax rates for feminine sanitary products are widely divergent:
- Canada — 0% GST (as of July 1, 2015)
- EU — Rates vary but EU law prevents separate member states from revising VAT allocations without the EU’s permission. In other words, the tampon tax can be reduced by not eliminated.
- France — 20% VAT (read the petition to reduce the tax)
- Ireland — 0% VAT (grandfathered)
- Italy — 22% VAT (read the petition to reduce the tax)
- Malayasia — 6% GST (read the petition to abolish the tax)
- Slovakia — 20% VAT
- United States — Rates vary by state. They are exempt in some states, such as Maine, Maryland, and Pennsylvania, while in states like California, Wisconsin and New York they are subject to state and local rates.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.