ECON and FEMM committees adopt report on gender equality and taxation policies

The European Parliament’s ECON and FEMM committees adopted a report on ‘Gender equality and taxation policies in the EUg(A8-0416_2018_EN), which was co-authored by GUE/NGL MEP Marisa Matias (Bloco de Esquerda) and Greens MEP, Ernest Urtasun.

Although the report needs to be adopted by the full plenary of the European Parliament, its adoption at committee level is a big step towards recognising the direct and indirect discrimination face by women arising from tax policies, and the need for European institutions and EU Member States to provide specific solutions.

Some of the stronger and most relevant points of the report are listed underneath:

1. Calls on the Commission to support gender equality in all taxation policies and to issue specific guidelines and recommendations to Member States, including that they carry out gender audits of fiscal policies in order to eliminate tax-related gender biases and to ensure that no new tax, spending laws, programmes or practices that increase market or after-tax income gender gaps or that reinforce the male breadwinner model are established;

3. Calls on the Commission (DG TAXUD) to be explicitly mandated to cooperate with EIGE in order to monitor and regularly report on the impact of Member States’ taxation polices on gender equality; calls on the Commission to increase the resources for EIGE for this purpose;

4. Calls on the Commission to promote EU ratification of the CEDAW Convention, as it did for the Convention on the Rights of Persons with Disabilities and is doing for the Istanbul Convention;

Direct taxation

Personal income taxation

6. Notes that tax policies have varying impacts on different types of households (dual-earner households, female and male single-earner households, etc.); underlines the negative consequences of failing to incentivise women’s employment and their economic independence and draws attention to the high gender pension gap resulting from joint taxation; stresses that tax systems should no longer be based on the assumption that households pool and share their funds equally and that individual taxation is instrumental to achieving tax fairness for women; considers it essential that men and women become equal earners and equal carers; urges all Member States to phase in individual taxation while ensuring full preservation of all financial and other benefits linked to parenthood in current joint taxation systems; acknowledges that transition periods towards such an individual taxation system may be necessary in some Member States; calls, during these transition periods, for the elimination of all tax expenditures based on joint income and notes the need to ensure that all tax benefits, cash benefits and in-kind government services are given to individuals in order to ensure their financial and societal autonomy;

8. Notes that the net personal average tax rates for second earners with two children stood at 31 % on average for the EU OECD members and 28 % for all OECD countries in 2014; calls on the Commission to continuously monitor and strengthen the application of the equal pay for equal work and work of equal value principle between women and men in Member States, to ensure that inequalities are eradicated in both the labour market and taxation sectors; calls on the Commission and the Member States to tackle horizontal and vertical segregation in the labour market by eliminating gender inequalities and discrimination in employment and, in particular through education and awareness-raising, encouraging girls and women to take up studies, jobs and careers in innovative growth sectors, including in ICT and STEM subjects;

Corporate taxation

17. Notes that differences in corporate wealth and labour market structures result in gender-differentiated effects stemming from corporate taxes, and that the benefit women derive from corporate tax reductions and tax incentives is smaller than that derived by men, as women are considerably under-represented in the group of business owners or corporate shareholders, as well as among new venture and business creations;

Taxation of capital and wealth

19. Notes that unavailability, prohibitive costs and lack of sufficient infrastructure offering quality childcare services remain a significant barrier to, primarily, women’s equal participation in all aspects of society, including employment; calls on the Member States to enhance tax policies to improve the availability and accessibility of affordable, high-quality childcare services, through tax incentives in order to reduce the obstacles for women to taking up paid employment and contribute to a more equal distribution of paid and unpaid work within households, and thus minimise gender pay and pension gaps; emphasises that these policies should allow women’s integration in the labour market and particularly focus on low-income families, single-parent families and other disadvantaged groups;

20. Calls on the Member States to eliminate gender gaps in wealth across the EU in terms of financial assets, property ownership, business assets, insurance entitlements, pension savings and stock options; notes that the reduction in capital gains and property taxes primarily benefits men, as they are more likely to control such resources;

Indirect taxation

24. Notes that gender bias occurs where tax legislation intersects with gender relations, norms and economic behaviour; notes that VAT exerts a gender bias because of women’s consumption patterns, which differ from those of men as they purchase more goods and services with the aim of promoting health, education and nutrition; is concerned that this, combined with women’s lower income, leads to women bearing a larger VAT burden; calls on the Member States to provide for VAT exemptions, reduced rates and zero-rates for products and services with positive social, health and/or environmental effects, in line with the ongoing revision of the EU VAT Directive;

25. Considers period poverty to be an ongoing issue in the EU, with Plan International UK estimating that 1 in 10 girls cannot afford sanitary products; regrets that female hygienic products, and care products and services for children, elderly people or people with disabilities, are still not considered as basic goods in all Member States; calls on all Member States to eliminate the so-called ‘care and tampon tax’ by making use of the flexibility introduced in the VAT Directive and applying exemptions or 0 % VAT rates to these essential basic goods; recognises that a reduction in price due to an exemption of VAT on these products would have an immeasurable benefit for young women; supports the movements undertaken to promote widespread sanitary supply availability and encourages Member States to provide complementary feminine hygiene supplies in certain (public) spaces such as schools, universities and homeless shelters, and for women from low-income backgrounds, with the aim of eradicating period poverty completely across EU public bathrooms;

Impact of tax evasion and avoidance on gender equality

28. Recalls the position of its PANA, TAX and TAX2 committees regarding the creation of a global body within the UN framework, which should be well equipped and have sufficient additional resources to ensure that all countries can participate on an equal footing in the formulation and reform of global tax policies; calls for such a body to be provided with gender expertise and to be mandated to review national, regional and global tax policy in accordance with gender equality and human rights obligations;

29. Calls on the Commission and the Member States to promote gender-equal taxation reforms in all international fora, including the OECD and the UN, and to support the creation of a UN intergovernmental tax body with universal membership, equal voting rights and equal participation of women and men; stresses that this body should be well equipped to develop specific gender taxation expertise;

30. Notes that double taxation treaties between Member States and developing countries do not usually promote source taxation, therefore benefiting multinational corporations at the expense of mobilisation of domestic resources by developing countries; notes that the lack of domestic resource mobilisation prevents fully financed public services such as healthcare or education in these countries, which disproportionately impacts women and girls; urges the Member States to mandate the Commission to review existing double taxation treaties so as to examine and address these problems, and to ensure that future double taxation treaties include gender equality provisions in addition to general anti-abuse provisions;

31. Calls on the TAX3 special committee to include a gender perspective in the formulation of its recommendations;

Gender mainstreaming in tax policies

36. Acknowledges the importance of women’s rights organisations and the community sector playing a leading role in the development of public policy, including in relation to the impact of taxation policy on gender equality; recognises the financial challenges facing women’s and community organisations in many Member States as a result of a decade of austerity policies; calls on all Member States that have cut spending in the past decade to restore the level of funding to the women’s community sector to its pre-2008 level;

38. Calls on the Commission to meet its legal obligation to promote gender equality by mainstreaming gender aspects in the assessments of fundamental tax policy design conducted within the European Semester; underlines that reviews of Member States’ tax systems within the European Semester, as well as country-specific recommendations, require thorough analyses with regard to effects on socioeconomic gender gaps, the prohibition of discrimination and the promotion of substantive gender equality, and should also address the need for adequate institutional measures at Member State level;

41. Notes that gender equality is not only a fundamental human right but that achieving it would contribute to more inclusive and sustainable growth; emphasises that gender budget analysis would allow for improved information on the distributional impact of public investment on men and women; calls on the Commission and the Member States to implement gender budgeting in a way that explicitly tracks what proportion of public funds are targeted at women and that ensures that all policies for mobilising resources and allocating expenditure promote gender equality;

45. Underlines that further research and better collection of gender-disaggregated data are required as regards gender-differentiated distributional and allocative effects of the taxation system; calls, in particular, on the Member States to collect tax data on an individual basis and not only on a household basis, and to close the gender data gaps on consumption patterns and the use of reduced rates, on the distribution of entrepreneurial income and related tax payments and on the distribution of net wealth, capital income and related tax payments;

47. Encourages the Member States to design an adequate tax-benefit incentive structure across policy measures that encourages migrant women to (re)engage in training or take unemployment;

Watch the video on the report underneath:

Read a previous blog post on the Draft Report on gender equality and taxation policies in the EU here