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Pink Taxes and Gender-Based Taxation in Nigeria


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Presentation by Okereke Happiness Ngozi at the second annual Nigerian Tax Research Network meeting which took place in Abuja on 24th and 25th November 2018.

Published in: Economy & Finance
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Pink Taxes and Gender-Based Taxation in Nigeria

  2. 2. What is GENDER-BASED TAXATION? Gender bias reflects in taxes which treat men and women differently. This discrimination can be explicit or implicit. • Explicit forms of gender bias are to be found in tax provisions which treat men and women differently outright. • Implicit discrimination occurs when gender neutral tax provisions interact with socio-economic realities that affect women. What are PINK TAXES? Pink taxes are additional costs of products and services specifically targeted at women. Pink taxes are not strictly taxes since they are not levied by governments but by producers who charge more for female products compared to similar male products of the same quality and composition.
  3. 3. Any tax system involves the taking of decisions which affect men and women differently. These decisions are taken over a long period and reflect social attitudes about the respective roles of men and women. Gender bias in taxation can be found in both soft laws and hard laws. • Fiscal policy decisions affect women because they interact with socio-economic realities that may produce gender differentiated outcomes. • In addition to soft laws, hard laws such as legislation have been used by some countries in the EU in a number of bold attempts to address gender gaps in employment, income, poverty and wealth.
  4. 4. SOCIO ECONOMIC REALITIES THAT AFFECT WOMEN Tax rules that explicitly discriminate against women are hard to come by as most countries have abolished these rules. Tax rules may interact with existing socio-economic realities which already treat men and women differently. Some of these socio-economic realities are:  Low Labour Force Participation: Nigeria has one of the lowest rates of employed women, as percent of total population in the world. Only 67% of women compared to 99.2% of men aged 45 to 49 years (the highest employed age bracket) are employed. The overall labour force participation rate was 65.1% compared to the male labour participation rate at 71.4%  Income Distribution: Statistics on the earning difference between men and women in Nigeria is scarce. Men are employed in more higher paying jobs and women are mostly secondary earners  Wealth Distribution: Women have less access to financial assets, property and inheritances. In Nigeria, female inheritance in Nigeria is hampered by customs that prohibit female inheritance  Poverty: Nigeria has overtaken India as the country with the largest number of people living in extreme poverty. The risk of poverty differs for men and women across age groups, but the gender gap in poverty is widest for older women who are widowed or living alone.
  5. 5. Gender Aspects of Taxation The 1999 Constitution provides that a citizen shall not be discriminated against by reason of sex, religion, political opinion etc. The Convention on the Elimination of Discrimination against Women (CEDAW) condemns discrimination against women in all forms. Although it does not explicitly mention taxation, all government policies are required to comply with its provisions. Apart from being unjust or unfair, gender discrimination is economically inefficient because it lowers output per capita. Discrimination prevents the equalisation of marginal rates of substitution in production. Women may be the ones paid lower but gender discrimination also lowers the entire economy’s total output. Gender aspects of taxation can be found in every kind of tax:  Personal Income Taxation Gender aspects of taxation are mostly visible in personal income taxation because personal income covers all kinds of personal income regardless of sources. S. 3 of PITA covers profit or gain from trade or business, salaries and wages, capital incomes (interests, dividends and capital gains), transfer incomes ( pensions) and so on.
  6. 6. • Global Tax vs Schedular Tax vs Flat Rate Tax In a Global tax system, a progressive income tax schedule is applied to all incomes received from all sources. Flat rate systems tax all kinds of income at relatively flat rates. Under a schedular tax system, Income from different sources are charged in separate schedules. Capital income is taxed at a moderately flat rate while labour income is subject to progressive income tax schedules. This obtains in Nigeria where dividend and interest income are taxed at a flat rate of 10% and other income is charged at the progressive rates: First 300,000 @ 7%, Next 300,000 at 11%, next 500,000 at 15%, next 500,000 at 19%, next 1,600,000 at 21% and above 3,200,000 at 24%. Capital incomes correlate with wealth which more men have. The redistributive quality of a progressive income tax is weakened. A schedular or dual system of tax as above will only accentuate the differences between men and women. • Joint Tax Provisions In the past, the tendency was to structure taxation around family-based income tax systems. Today, joint tax provisions with a gender aspect include those with family based tax reliefs or child tax credits. Transferrable tax relief between partners or spouses are absent in Nigerian tax laws hence discrimination against single parent families or secondary earners does not arise. Tax planning on a family basis is however limited in Nigeria.
  7. 7. • Child Care Costs Female employment and intra-household distribution of work are also influenced by childcare costs, which can be seen as an indirect tax on female employment. The absence of tax relief for child care costs reflect a gender bias of not considering that a double earner family will have to purchase child care like any other good or service. In Nigerian families, an ‘inactive’ partner will be required to do this as part of unpaid work in a single earner household. Tax exemptions for childcare costs reduce the costs of taking up employment as well as the costs of extending hours worked by secondary earners and thus support in particular employment by mothers.  Property Taxation and Taxes on Wealth The major gender aspect of property taxes is hinged on the attribution of ownership and income from jointly owned property to men. Unless the spouse is able to provide convincing proof of a direct and substantial contribution to the purchase of the property, there will be no joint ownership. The owner or occupier of property must be determined by the usual common law rules relating to the ownership pf joint property. If property is bought in the name of the wife, there is a presumption of advancement even if the husband did not intend the property as a gift. Taxation of inheritance is absent in Nigeria.
  8. 8.  Consumption Taxes Although consumption taxes do not show explicit bias since they are levied on the purchase of commodities without particular reference to gender. Yet consumption taxes can reflect implicit gender bias. It can be argued that consumption taxes affect women more since they form the larger proportion of the population with lowest incomes. Women are more likely than men to spend a higher proportion of their income on purchase of basic goods and services. Hence although VAT is a broad base consumption tax compared to excise tax or custom duties, yet the consumption pattern of a gender can reflect implicit gender bias of VAT. TAMPON TAX Nigeria currently taxes women and Young girls for having a period. Under the VAT Act, female hygiene products are not exempted under the First Schedule to the Act since they neither constitute medical and pharmaceutical products or baby product. The FIRS circular No 9701 lists sanitary towels and tampon napkins for babies as VAT exempt. There is a need for a clear amendment of the VAT Act to remove this ambiguity and make sanitary pads which are as basic as can be, VAT exempt.
  9. 9. Recommendations and Conclusions Efforts and considerations must be made by policy makers to achieve gender neutral tax laws. Yet, it must be acknowledged that intended gender neutral laws may produce gender differentiated outcomes due to their interaction with socioeconomic realities. Gender bias may be positive. • Singapore’s tax system is unique in the nature of explicit gender differentiation it builds into the income tax in the form of child relief. A basic child relief is available. In addition, a married woman is entitled to additional allowances for children if she has elected to be charged to tax in her own name. She must have passed at least three subjects in one sitting at the examinations for the General Certificate of Education or obtained an equivalent or higher educational qualification. This is clearly a positively discriminatory provision to encourage married women to have children. • The Tampon tax used to call attention to the fact that tampons and other female hygiene products ate subject to VAT. The exclusion of VAT by including it expressly among the exemptions in the First Schedule to the VAT Act. Women should not be taxed for a biological necessity.