Efforts to integrate a gender perspective into public budgeting decisions have been taking place for almost 20 years and analysts and activists are increasingly interested in using gender revenue analysis as a tool for advancing gender equality. What are the gendered impacts of government fiscal policy? Can gender concerns be adequately integrated into economic policy? Compiled for the Commonwealth Secretariat, this paper reviews the literature on the gender dimensions of taxation and the implications for tax policy in developing countries.
Taxes in developing countries represent a large extraction of resources that affects all aspects of social and economic life and ultimately determines the path and distribution of development. Taxation is a critical subject for a gender analysis of development policy as the majority of the population in the developing world are poor women. As such, adequate financing of public services is a pressing issue with special gender relevance.
The issue of gender bias in taxation is a fairly new discussion and the literature on the subject is limited. It is possible, however, to make some general assumptions about the implications of gender for taxation policy:
- Gender is one of many social stratifiers that interacts with other social stratifiers such as class, race, ethnicity and location.
- Groups without political or economic power, particularly the poor and women, are often excluded from the taxation debate and from tax policy decisions.
- Throughout the world women have primary responsibility for children and dependents and therefore play a dominant role in the unpaid economy.
- As women’s labour force participation rate is lower than men’s and they are more likely to work in the informal sector, the are unlikely to bear a large share of the personal income or direct tax burden.
- Developing countries derive a proportionally lower share of taxation revenue from income taxes than high-income countries, relying significantly more on indirect taxes to fund essential public spending.
- Indirect taxation is likely to have a greater impact on women than on men as they represent a heavier burden on the poor.
In recent decades, tax reform initiatives have focused on simplifying tax structures, broadening the tax base through VAT as an easy-to-collect single-stage consumption tax and reducing personal and corporate tax rates to stimulate investment and production. In both developing and developed countries there is concern that such reforms have adversely affected the poor, particularly women, on both the tax and expenditure side. Gender revenue analysis is a fruitful tool for both analysing and correcting gender biases and can be advanced in a number of ways:
- Existing efforts to improve the collection of sex-disaggregated data around the world should be supported and expanded.
- A legal review of tax law in developing countries should be implemented in order to identify explicit bias and formulate recommendations for change.
- Research on gender biases in indirect taxes should be supported with a particular focus on exemptions provided under VAT and whether these exclude food and basic necessities that contribute to human capital development, including health and education.
- Research should be undertaken on the potential equity and gender improvements that could be achieved if a greater share of tax revenue came from direct rather than indirect sources.