Reasons For Brexit – India Dumps Tampon Tax, Britain Can’t

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A minor but nonetheless real argument in favour of Brexit, the UK leaving the European Union. India ha just decided to lift the GST – that is, VAT – on tampons. Any and every British political party would do entirely the same. But they can’t, because the EU say no.

Yes, quite so, India is a sovereign nation, Britain not. That sounding like a pretty good reason to leave and be sovereign again:

India has scrapped its 12% tax on all sanitary products following months of campaigning by activists.

Sure, we can argue that taxes have to be collected somehow so why shouldn’t we be taxing necessaries? It’s not as if modern women aren’t strong enough to hold up their end of the society financing bargain, is it? We might also suggest that necessaries aren’t things to be taxed:

The decision over the weekend to exempt sanitary pads from India’s comprehensive goods-and-service tax came after a year-long campaign against the levy. Activists said it was highly callous to tax menstrual hygiene products in a country where most women still have no access to them at all.

There’s no economic guide to what should or should not be taxed in this manner really. Taxing things people must have is non-distortionary, taxing things people must have makes life more expensive. Ho Hum then. The political arguments are entirely different of course. The emotional appeal made about not taxing menstruation is always going to trump any shouting about our having to get tax from somewhere.

The issue has also been a focus of political debate in Britain where sanitary products are still taxed as a ‘luxury’ product.

George Osborne announced as far back as 2016 that the government would seek to abolish the ‘tampon tax’ but Britain currently remains tied to EU rules.

Actually, Gordon Brown thought about it at least a decade before that. To be told that European Union rules on’t allow that.

You can have various VAT rates, the minimum being 5%. You can have things that are exempt, those that are zero rated (the difference is boring). Anything that has ever been charged to VAT cannot then be made zero rated or exempt, the best that can be done is to take the VAT rate down to that minimum 5%. Which is why tampons in the UK carry 5% VAT.

India’s out of the EU, is a sovereign nation, it can reduce VAT on tampons to nothing. The UK cannot reduce VAT on tampons to nothing because it is in the EU. OK, small beer perhaps but it does seem that there are advantages to being out of the EU and a sovereign nation.