The UK’s Marriage Allowance gives the main wage earner (usually the man) a tax break in couples where the lower earner is on ￡11,500 or less.25 This bolsters the gender pay gap on two fronts: supplementing male income, while also creating a perverse incentive for women to work fewer paid hours. Japan has a similarly male-biased married-couples tax break. Since 1961, the ‘head of household’ (normally a man) has been able to ‘claim a tax deduction of ￥380,000 ($3,700) as long as his spouse’s income does not exceed ￥1.03m (around $10,000)’. A 2011 survey by Japan’s labour ministry found that ‘more than a third of married women who worked part time and deliberately curtailed their hours did so to keep the tax deduction’.26
In a slightly different example of a hidden gendered bias, Argentina’s tax system provides a rebate almost four times higher for employees than for the self-employed. Gender comes into it because men are more likely to be employed in the formal economy, while women are more likely to be self-employed in the informal economy.27 So the tax system is essentially covertly giving a higher rebate to men than to women.
There’s a fairly simple reason why so many tax systems discriminate against women, and that is that we don’t systematically collect data on how tax systems affect them. In other words, it’s because of the gender data gap. The impact of taxation on women is ‘an underdeveloped area of research’ according to a 2017 report from the European Parliament, which called for more sex-disaggregated data on the issue.28 Even countries such as Spain, Finland and Ireland that have taken steps to analyse their budgeting from the perspective of gender, usually focus only on spending, not tax. In the EU, Austria ‘is one of the few countries where the government has defined specific goals for the tax system, such as promoting a more equal division of paid and unpaid work between women and men, enhancing the labour participation of women and reducing the gender pay gap’. Meanwhile, a 2016 survey of EU member states found that only Finland and Sweden have strictly individualised income tax systems.29
The tax system’s woman problem extends beyond the zombie assumption that household resources are allocated equally between the sexes: it encompasses the theory of taxation itself – at least in its current form. Since the 1980s, governments around the world have been less interested in taxes as a means to redistribute resources, seeing tax more as a potential retardant to growth that must be contained. The result has been lower taxes on capital, corporations and high-income earners, and an increase in loopholes and incentives so that multinational corporations and the super-rich can avoid and evade tax. The idea is not to ‘distort otherwise efficient market processes’.30
When gender has come into this framework at all, it has been solely in the context of how tax might harm growth by disincentivising women to enter paid employment. What isn’t considered is how a tax system focused so narrowly on enabling ‘growth’ benefits men at the expense of women. Cuts in the top rates of income tax disproportionately benefit men because of the gender pay gap. For the same reason, the majority of women in the world are not in a position to make use of the various tax loopholes an expensive accountant can afford you. Decreases in (or non-enforcement of) wealth and asset taxes also disproportionately benefit men, because men are far more likely to control such resources.31
But it’s not just about benefiting men over women. These male-biased benefits actually come at women’s expense, because as we’ve seen, women have to fill the resulting service gaps with their unpaid care work. In 2017, the Women’s Budget Group pointed out that at the same time that austerity measures were having a particularly severe impact on women in the UK, ‘tax giveaways disproportionately benefitting men will cost the Treasury ￡44bn per annum by 2020’.32 These include a ￡9 billion cut in fuel and alcohol duties, a ￡13 billion cut in corporation tax, and a loss of ￡22 billion from raising income tax and National Insurance thresholds. Together, these tax giveaways accounted for more than the total annual cuts in social security spending – which makes it clear that this isn’t a matter of resources, so much as (gendered) spending priorities.
The problem of low tax revenues in low-income countries is exacerbated by cross-border tax-avoidance techniques: multinational companies often ‘negotiate tax holidays or incentives as a condition for bringing their business to developing countries’, costing developing countries an estimated $138 billion in revenue annually. Well, the argument goes, if massive corporations paying zero taxes while they exploit cheap labour is the only way to get them there . . . Only it isn’t. The OECD has found that ‘such incentives are rarely a primary reason for investment in developing countries’.33 Women’s cheap labour, on the other hand, is certainly quite the draw. Nevertheless, such tax systems are sometimes ‘imposed as conditions on developing countries by international financial institutions’.34
In a parallel to UK tax giveaways that outpace its spending cuts, the IMF estimates that developing countries lose $212 billion per year from tax-avoidance schemes, which far outstrips the amount they receive in aid.35 Over a third of the world’s total unrecorded offshore financial wealth is thought to be secretly held in Switzerland, which recently faced questions from the UN ‘over the toll that its tax and financial secrecy policies take on women’s rights across the globe’.36 A 2016 analysis by the Center for Economic and Social Rights (CESR) found that the amount of money lost to tax dodging by multinational copper firms such as the Swiss-headquartered Glencore in Zambia, could finance 60% of the country’s health budget. CESR also estimated that the Indian government lost out on up to ‘$1.2 billion in direct tax revenue from the funds held in just one bank branch in Switzerland – comparable to as much as 44% of [India’s] expenditure on women’s rights, and 6% of total social spending in the country in 2016’.37
Governments need money, so they have to make up these losses somehow. Many of them turn to consumption taxes because they are easy to collect and difficult to evade. Low-income countries raise ‘about two-thirds of their tax revenue through indirect taxes such as VAT, and just over a quarter through income taxes’.38 A recent International Labour Organization analysis found that 138 governments (ninety-three developing and forty-five developed countries) are planning to either increase and/or extend consumption taxes, primarily through VAT.39
This increase disproportionately affects women too. Not just because they are over-represented among the poor (the poorer you are the higher a proportion of your income goes on consumption), but also because they tend to bear the responsibility of buying food and household goods. And because women’s paid labour supply is more elastic (in no small part because of the gender pay gap), increasing VAT can have the effect of pushing women to spend more time in unpaid work in order to produce in the household what they might otherwise buy on the market.
This problem is exacerbated by an often gender-insensitive allocation of what products do and don’t have VAT added, driven by an overall lack of research based on sex-disaggregated data on the impact specific consumption tax rates and exemptions have.40 VAT is not generally added to products that are seen as ‘essential’, so in the UK, food is exempt because it’s considered essential, while iPhones are not because they are not. But one man’s frivolity is another woman’s essential, and around the world women have been campaigning to get male-dominated legislators to recognise that sanitary products are not luxury items. In some countries they’ve even succeeded.
It’s clear that tax systems around the world, presented as the objective trickle-down of market-driven forces have intensely gendered impacts. They have been created based on non-sex-disaggregated data, and male-default thinking. Together with our woman-blind approach to GDP and public spending, global tax systems are not simply failing to alleviate gendered poverty: they are driving it. And if the world cares about ending inequality, we need to adopt an evidence-based economic analysis as a matter of urgency.
CHAPTER 14
Women’s Rights are Human Rights