WORLD OVER, tax is the highest source of government revenue. Even as the finance minister in India was raising the ceiling on taxable income for women, there was a petition in the Madras High Court questioning this. The petitioner alleged that the provision of taxing women less violates men’s constitutional right to equality. The HC, in turn, asked the Union Government to respond on why tax benefits should favour women. So why should men and women taxed differently?
I am not an economist but I know from experience and conversations with women about their lives and the economics of their households that taxing women less makes sense. While doing research on this, I came across an excellent paper called Gender impacts of government revenue collection: The Case of Taxation by Kathleen Barnett and Caren Grown, which was commissioned by the Commonwealth Secretariat as a part of its commitment to integrate gender concerns into economic policy. It gives some solid reasons as to why men and women should be taxed differently. I thought I’d encapsulate some of these for you:
Women’s work in the unpaid care economy
World over, women have the responsibility of caring for children and dependents. As a result, they do a lot of unpaid work like cooking, cleaning and caretaking which are vital services to the paid economy. This work, though time consuming and backbreaking in many cases, is undervalued and not remunerated. In most households, this is what enables men to go out and do productive work. Feminists have argued that this unpaid, unremunerated work should be factored in while calculating the GDP of any economy.
Though women do more work (including unpaid), their participation in productive work is very low. Even within paid employment, women are concentrated in clerical, sales and service jobs and are underrepresented in administrative and managerial positions. Women also exit the labour force frequently implying that their jobs are discontinuous, seasonal or on contract. Overall, women earn less than men. Disparity in earning is a persistent gender equality issue.
Gender differences in property
In many countries women are frequently denied the right to own property because of social norms. The land asset-ownership gap between men and women is huge. This reduces women’s capacity for risk taking, securing a place to live and securing resources for a livelihood. For many women, the only income is their wages without assets or other social capital.
Gender differences in household decision making
Studies reveal gender differentials in consumption patterns. Women tend to spend more on food, education and healthcare which enhance the well being and capabilities of children. This kind of spending leaves very little for savings or asset building. For example, women have to spend on household help or nannies to look after children and accomplish household chores, or rely on parents and other support if they have to join the productive workforce. Taxing women would mean that women would either have to reduce these spends or to maintain them, would end up spending less on their healthcare, work longer hours and have less leisure.
Besides income taxes, another important source of government revenue is indirect taxes. Indirect taxes are taxes levied on goods we buy and consume. When items are taxed irrespective of who buys, uses or needs them, it enormously burdens women and the poorest of the poor. For instance, household items such as pressure cookers are taxed. Isn’t the pressure cooker a necessity? It reduces fuel consumption and hours of work. Isn’t fuel saving a necessity? Another vexing example is taxing and classifying sanitary pads as luxury items. Who decides that a sanitary pad is a luxury item? Bureaucrats in the finance ministry? These are everyday examples.
Though there are some initiatives being undertaken with regard to gender budgeting, there are more areas in finance, policy and planning which need scrutiny from a gender perspective to understand their impact on women. We cannot assess taxes only on the basis of income earned without examining other aspects of women’s lives. Men and women consume, spend and invest differently. They also have different work and responsibilities, and different levels of income, all of which significantly affects the impact of taxes and is a justification for differential taxation.