The Tampon Tax: Stop wasting your time – the Government’s hands are tied

Recently, over 250,000 people signed a petition asking the government not to charge VAT on tampons. A reasonable proposition. But what are they hoping for, exactly?

First, a little background. Tampons currently attract VAT at the reduced rate of 5%, meaning that someone who goes through a pack a month of Tampax Pearl would pay about £1.13 a year in VAT – about 9p a month*. Other items that attract the reduced rate of 5% include contraceptives, smoking cessation aids and mobility aids for the elderly.

Not a bank-breaker then, and certainly not a tax that is aimed solely at ‘luxury’ goods. Nonetheless, let’s have a think about what the people who signed the petition are after. The way we see it, they must be hoping for one of the following 3 things :

1) Tampons to be charged 0% VAT (“zero rated”)

2) Tampons to be charged a rate of VAT lower than 5%

3) Tampons to be exempted from VAT.

Let’s think about these three in turn .

If they’re hoping that tampons will become zero-rated, they’ll be disappointed. Zero rating was a special concession given to the UK when VAT was brought in by the EU in 1973. The list of zero rateable goods was grandfathered on that day and OK’d by Brussels on the condition that no other goods would be added. Ever. And on the understanding that zero-rating would be slowly phased out.

Most other EU states aren’t allowed zero-rated goods, and the EU never intended zero-rating to be a widespread fixture in the VAT system. It would therefore be unlikely to let the UK add to its already generous 0% list. Given that any changes to this list would require unanimous backing from all 28 member states, most of whom don’t enjoy zero-rating, it just ain’t gonna happen.

So much for that. But what about option 2, charging a rate lower than 5%?

If that was the hope, tough luck. EU legislation is such that 5% is the lowest rate of VAT that can be applied to anything (as we noted earlier, the 0% rate was a one-off concession made in 1973 to the UK). Reducing this would require all 28 signatories – again, unlikely to happen. Reducing the lowest rate of VAT states can charge would have enormous consequences for the continent’s already stretched finances. It’s unlikely that people being charged up to £1.13 a year for tampons in the UK would bring about European-wide changes.

Okay. What about option 3?

One is similarly misguided if one believes that Tampons could become exempt from VAT. The legislative issues with changing EU law mentioned above would continue to apply. Thus, incredibly unlikely. Besides, if a company sells exempt goods, then it can’t recover the VAT on its inputs, meaning the costs soar by up to 20%. Tampax would be forced to pass the extra costs on to consumers, likely increasing the price beyond the 5% currently charged as VAT.

We believe that Tampons should be sold free of VAT. If you agree, then don’t waste any more time signing petitions that aren’t going to be of any use. The UK government can’t do anything about this. The EU commission won’t. If you consider it vitally important to be able to petition the government on issues like this, you should consider voting to leave the EU in the upcoming referendum

We understand much of this movement is about the principle of taxing necessities. However, this isn’t the only injustice within the UK tax system. Have a look at national insurance, which is structured such that someone making the average UK salary of £26k pays 8%, while fatcats who rake in ten times that – £260k – pay just 3 %.

More (dare I say it) pressing issues than the tampon tax are indirect taxes like (EU mandated) VAT, as well as fuel, booze duty and others, which mean that the poorest fifth of the UK pay a 3% higher rate of tax on their income than the richest fifth, even after taking into government cash benefits to the poor . The fact that the UK’s tax system is in fact regressive in this way is a little-known scandal, which anyone interested in social justice should be shouting about.

We’re all for making the tax system fairer and more progressive. But the £1.13 a year ‘tampon tax’ is not the front line in this struggle. Besides, you’re taking on the wrong people. Turn to the EU.

*Based on a sales price of £1.97 for a pack of 20, annual VAT would be £1.97 x 12 x 5/105

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