Tampon Tax expected to be scrapped at Budget
The hugely controversial 5% VAT charged on women's sanitary products, the Tampon Tax, is expected to be scrapped on Wednesday's Budget. There is, however, much concern that the tax revenue it generates, currently donated to women's groups and charities, will suffer.
The controversy centres around the issue of the products being viewed as essential, not luxury, so should not be charged VAT. These products being viewed as necessary not luxury items and therefore should not be subject to VAT.
So it has come as welcome news that the Tampon Tax may be scrapped on Budget day.
The news of scrapping the tampon tax came the same week as International Women's Day and has been much applauded by Labour and Tory ministers alike. The scrapping of the tampon tax is estimated to save the average woman nearly £40 over her lifetime, which translates as a 7p reduction on a 20 pack of tampons and 5p on a 12 pack of pads.
Over the period of time since it has been introduced, the tampon tax has raised £62 million of tax revenue in England and Wales going to projects helping disadvantaged and vulnerable women.
The tampon tax was introduced in 1973 when the UK joined the European Economic Community. It was reduced to 5% VAT in 2000 as a result of extensive lobbying. The tampon tax made headlines again at the 2015 general election when the UK National Independence Party (UKIP) promised to abolished it completely. George Osborne took up the fight and promised in his Autumn Budget to abolish it from April 2018. This did not happen, much to the dismay of women campaigners.Since then, new EU VAT rules have come into play which allow the UK to abolish tampon tax effective as at January 2022. But since a deal was reached on Brexit, it is expected Rishi Sunak, the Chancellor, will confirm its abolition at Wednesday's Budget.
Scrapping the Tampon Tax in Scotland
The devolved Scottish government have chartered a slightly different course. They piloted a half year programme in July 2017 offering free sanitary products to schools and food banks for girls and women in need. A study by the World Health Organisation and UNICEF discovered that one out of five women in Scotland have been forced to improvise using toilet paper and old clothes. A bill to make these products available for free to everyone received preliminary approval in the Scottish Parliament in February 2020.
Tampon Tax Community Fund
However, the concern now lies with how the existing Tampon Tax Community Fund will be funded supporting vulnerable girls and women in the UK.We will have to wait till Wednesday to see what our new Chancellor of the Exchequer delivers.If you are looking for tax advice for you or your small business, please get in touch to see how we can help.
