To coincide with the IMF and World Bank Annual Meetings taking place in Bali from October 12th to 14th, ActionAid’s new report, Short-changed: How the IMF’s tax policies are failing women looks at how the IMF’s current tax policy advice is gender blind and is reinforcing patriarchal power structures – entrenching rather than transforming gender inequality.
Tax policies are critical to transforming gendered power relations and the IMF needs to change its policy recommendations to governments to ensure that they are gender-sensitive and not over-burdening the poorest and in particular poor women.
How tax is raised and spent is central to women’s rights, and arguably more important to women than men. Women tend to depend more on public services, due to their reproductive health needs and unequal distribution of unpaid care work – women are responsible for 75% of the time spent on the world's unpaid care work. Governments also need to provide services that prevent and respond to the high levels of violence that women face in both domestic and public spheres. This is why the amount of revenue raised for public services matters so much and why issues such as tax dodging by companies and individuals are crucial to the fight for women’s rights.
Differences between men and women’s employment, income and spending patterns as well as asset and land ownership mean that different types of taxes affect the sexes differently. Globally there is clear gender inequality in ownership of land and property; women own only 20% of all agricultural land even though in many countries they make up the majority of farmers and producers. In employment women not only earn less than men, evidenced by the gender pay gap - which exists in all countries - but women are also over-represented in the informal sector where they lack social-protection such as paid maternity leave, or sick leave.
The IMF’s tax policy advice to countries in the global south often recommends increasing the rate and removing exemptions from consumption taxes such as value-added tax (VAT). This approach is likely to increase gendered economic inequality. Consumption taxes such as value-added tax VAT are often regressive. Because women are over-represented among the poor and often spend a higher proportion of their income on goods and services (which are subject to VAT) for their families, this means women will likely pay a higher proportion of their income in consumption tax than men. According to the IMFs own research into the distributional effects of VAT, personal income tax and corporate income tax, VAT is the most regressive.
Countries in the global south tend to raise a much lower proportion of their total tax revenues from taxes that affect people on the middle and high incomes, compared to countries in the global north. Taxes such as personal income tax can be patchy in their enforcement and taxes on assets such as property tax and capital gains tax are often under-utilised. This means that the tax system as a whole is not progressive and men who are over-represented among the rich and owners of assets do not contribute as much as they should to the country’s tax effort. If the IMF is serious about tackling gender inequality we recommend - as a matter of urgency - staff place a much greater emphasis on implementing these progressive taxes and stop using the excuse that backing these taxes forces the institution into a political position.
Through ActionAid’s work with communities in Ghana and Zambia we have found that women market traders find that the tax payments they are required to make to local government tax authorities are too high. In the words of women we interviewed in Ghana, “Petty traders like me should not pay tax because we don’t get enough profit from the things we sell” and “I don’t know what they use our money for.” Through interviews with 155 individuals in the Ga West Municipal District in Ghana, including a large number of market traders, we found that taxes on market stalls weren’t being assessed correctly, which was potentially leading to inflated tax costs.
In the communities in Ghana and Zambia where we carried out interviews on tax payments and public services we found that there were major gaps in public service delivery; such as a lack of a health clinic in the Maondo area of Zambia. Some HIV patients reported having to walk 30km to the nearest clinic to access Antiretroviral drugs (ARVs). Some women living with HIV/AIDS said that this distance was too much for them. This meant they were not able to consistently access treatment, leading some of them becoming frequently sick while others had fallen chronically ill and died.
Given how critical macroeconomics is to gender equality, the IMF needs to stop tinkering around the edges of gender equality through initiatives to increase female labour force participation. Instead it must grasp the nettle of ensuring the IMF’s own tax and expenditure policy advice is gender-just and ensures a level playing field for women to take their rightful place in the economy.