07 Sep Marisa Matias and Ernest Urtasun publish draft report on gender equality and taxation policies in the EU
MEP Marisa Matias (Bloco de Esquerda), GUE/NGL ECON Co-rapporteur, and MEP Ernest Urtasun (Iniciativa per Catalunya-Verds), VERTS/ALE FEM Co-rapporteur, issued this last September 6 a draft report on gender equality and Taxation policies in the EU; which will be voted in both ECON and FEM committees on November 21, 2018.
A study on Gender equality and taxation in the European Union (Gunnarsson, Schratzenstaller and Spangenberg) had found in 2017 that allocative and distributional impacts of tax laws and tax policies on gender equality had not been taken into account adequately by policy-makers at Member State and EU level.
Thus the relevance of this draft report in the European Parliament, which addresses various aspects of taxation that impact gender inequality, via direct taxation (i.e. in personal income taxation, corporate income taxation and taxation of capital and wealth) and indirect taxation, but also in relation to the impact of tax evasion and avoidance in gender inequality; and calls on Member States and European institutions to include a gender perspective in their tax related policies in order to ensure gender equality.
Regarding income taxation, the draft report observes that there is a need to move to individual taxation in order to avoid the impact that joint household taxation has in women’s labor market participation as has been pointed out by Gunnarsson, Schratzenstaller and Spangenberg (2017). The draft report also notes that there is a need to reconsider tax expenditures (i.e. tax exemptions, allowances, deductions reducing the tax base, credits reducing the tax liability but also lower tax rates for income from certain sources) to progressively ensure that all tax benefits, cash benefits, and in-kind government services are given to women as individuals in order to promote their financial autonomy; and calls for personal income tax to be designed to actively promote an equal sharing of both paid and unpaid work, income and old age security between women and men as well as to eliminate incentives that perpetuate gender inequitable roles.
In respect to corporate taxation, given the lack of impact assessments on corporate taxation and gender inequality, the draft report calls on Member States to not only eliminate and reduce their aggressive tax planning opportunities and tax incentives or breaks they provide to corporations, but also to assess ex-ante and a posteriori the potential impact on gender equality of these incentives.
On taxation of capital and wealth, the draft report deplores the persistence of gender gaps in women’s property ownership, particularly of major assets; and notes that the reduction of capital gains and property taxes primarily benefits men, as they are more likely to control such resources.
The European Commission’s 2018 taxation trends report notes that corporate tax rates in the EU have fallen dramatically since the 1980s, decreasing from above 40% to 21.9% in 2018 while in contrast, the rate of consumption taxes (of which VAT is a large component) has increased since 2009, reaching 20.6% in 2016. As has been observed by Gunnarsson, Schratzenstaller and Spangenberg (2017), consumption patterns of men and women differ, caused by socioeconomic differences in paid and unpaid work, and regressive taxes put a higher burden on women, due to lower incomes.
Therefore, the Matias-Urtasun European Parliament draft report not only notes that VAT exerts a gender bias because of women’s different consumption patterns, purchasing more goods and services than men with the objective to promote health, education and nutrition; but calls on Member States to provide VAT exemptions, reduced rates and zero-rates for products and services with positive social, health and/or environmental effects; and of course, calls on all Member States to remove the so-called Care and Tampon Tax by making use of the flexibility introduced in the VAT Directive and apply exemptions or 0% VAT rates to these essential basic goods.
Regarding the impact of tax evasion and avoidance on gender equality, the UN ‘Final study on illicit financial flows, human rights and the 2030 Agenda for Sustainable Development’ had observed in 2016 that tax evasion and tax avoidance are major contributors to gender inequality as they limit the resources available to governments to increase equality. Something that had also been pointed out by Grondona, Rodriguez, Enriquez and Bidegain Ponte also in 2016. For which reason, the draft report calls on the TAX3 special committee to include a gender perspective in the formulation of its recommendations.
Finally, the draft report acknowledges, as had been pointed out by Gunnarsson, Schratzenstaller and Spangenberg, that there is a lack of comprehensive empirical research about the distributional and allocative gender impact of the taxation of property and wealth; and that there is a need to obtain sufficient gender disaggregated data. Therefore, it calls on the Commission and the Member States to carry out gender impact assessments of fiscal policies before and after implementation; and recommends further research and better gender-disaggregated data collection with regard to gender-differentiated distributional and allocative effects of the taxation system.