Thursday, January 28, 2016

Taxing tampons

An awesome feature of this country, which has been home for this argumentative Indian for nearly thirty years, is this--it is one arguing society.  The arguments challenge the status quo, some more revolutionary than others.

Consider this: most states have sales taxes.  But, almost all the states exempt some goods from sales tax.  While the list of exemptions vary across the states, the general idea is that some fundamental necessities will not be taxed.  No tax on bananas, for instance.

Which is when the debate begins. When does a good become a "necessity"?  

It is not easy answering that question, dear reader.  Which means we set ourselves up for a great deal of argument.  It is a fascinating country!

How about female hygiene products?  You know, sanitary napkins, tampons, ... are they necessities or luxuries?
If you are or know women, you know that menstruation is for most not an optional thing. Yet in the vast majority of states in the US, tampons and pads are subject to sales tax.
"Tampons (and similar products) are tax-exempt in only a handful of states"
Source

So, what might be a problem with freeing tampons from sales tax?
[The average] American spends less than half of his or her income on items subject to sales tax. In California, the sales tax is already narrower than the national average, applying to just 27 percent of state residents’ incomes.
Sales tax bases have shrunk over time partly because states have created new exemptions, partly because untaxed online sales have expanded, but most of all because the economy increasingly consists of services.
And when the economy does not do well?
Sales taxes that exclude necessities and services tend to end up relying heavily on restaurant meals and durables like electronics and furniture, which are categories of spending that consumers cut back on when the economy weakens. This makes sales tax receipts more volatile, worsening the budget crises that arise in recessions.
That's a tad convoluted for most people; in plain-speak, please:
That is, one advantage of keeping the sales tax on tampons is that people will buy them whether the economy is good or bad
What a horrible way to address menstruation!

At least in the US women have access to such hygiene products and at low prices.  In many developing countries, girls attending schools becomes a major problem, and providing them with these products does wonders not only for girls' education but for their self-esteem too.

To me, well, there is no argument here: the sales of tampons and sanitary napkins should not be taxed.  But then who listens to me anyway!

7 comments:

Gowrisankar Namasivayam said...

Would raising a petition using change.org to the appropriate authority help bring your suggestion / demand to light ?

Mike Hoth said...

The problem with exemptions is that you can make arguments for (or against) just about anything. While I certainly agree that tampons should fall into the category of "necessities" there is a larger issue at hand that is highlighted here. Grey areas (or gray, because ironically the spelling is a grey area) are very difficult to build laws around. Tampons are a necessity, sure, but what else should evade the sales tax? There is clearly a long list already. Should we create a federal tax to catch all those online purchases? If the sales tax creates a larger impact during recessions, should we replace it? There are no easy answers in government, and taxes certainly don't simplify the problems.

Anne in Salem said...

Reminds me of an old joke. Wife is shopping for husband who wants her to buy him cigarettes. Instead, she buys papers and tobacco so he can roll his own. She assumes the result will be the same but at much less expense. He, of course, is not pleased. Next time he shops, she asks for tampons. He buys cotton balls and spool of string and tells her to roll her own. Message surely received!

Sriram Khé said...

Yes, thanks to the issue getting more coverage, voters have been voicing their views in the public space, even at change.org.

Yes, this is an example of the grey area that politics is about. There is only one group--a very small one--that can claim the high ground: the adamantly anti-tax and anti-government libertarians. Everybody else engages in horse-trading. In the case of tampons, it is a gender-specific tax, which makes it all the more unfair.

Looks like you watched the video and via the joke referring to how the sanitary pads are sold all carefully wrapped and hidden ...

Ramesh said...

I am unbelievably delighted that two blue blooded Americans have chosen to spell grey as grey instead of the American abomination of gray. There is hope in this world :)

I am not buying your argument of not taxing tampons. As Mike has observed you can make the argument for almost any product. I argue the opposite - tax every item and allow no exemptions (yes including bananas) but tax everything at a lower rate. It is when you start tinkering with exemptions that you create all the corruption and the whole lobbying industry.

Indirect taxation by definition is regressive - it hurts the poor more than the rich. Indirect taxation should be relatively lower. Direct taxation (income tax) should instead be higher so that the burden falls more on those who can afford it rather than those who can't. Interesting that the Republican extremists all want to abolish income tax and replace it with some form of an indirect tax.

By the way Ramamritham woke up quite early to the realisation that services are constituting a big percentage of spend and are outside the ambit of the usual sales tax. He introduced service tax in India many years ago and continues to squeeze every paisa out of hapless Indians.

Sriram Khé said...

Nope, taxing everything will be uber-regressive. The lower-income segments pretty much consume all they earn. If you were to tax everything they consume, their effective taxation rates will be ugly. Meanwhile, the higher income earners, whose spending on food in particular, is a way smaller percentage of their consumption, will see an incredibly lower taxation rate.
We will have to exempt the "necessities." Feminine sanitary products are necessities. I would argue that even birth control pills are necessities for that same reason--it is not like women *choose* to have periods and, therefore, it is a luxury. Unlike with shitting, which all of us do, it is a segment of the population that has to deal with menstruation. Which is why tampon tax is a remarkably stupid idea. I am surprised that it has continued this long--I am sure it is because politics is dominated by men, in the discussions and in the decision-making bodies.

Sriram Khé said...

Ramesh, who trusts the Economist more than my words ;), will have read this by now :
https://t.co/DUcofCvqpC

The Economist messes up by comparing to the VAT on razors for men. Ahem, men have the option of not shaving, as I demonstrate every day, but women have no choice but to figure out how to deal with the blood flowing out ...