Gender and Taxation
By
Bernadette Wanjala
Kenya Institute for Public Policy Research and Analysis (KIPPRA)
Tax Justice Academy
Maanzoni Lodge, Nairobi, Kenya
3rd December 2014
Introduction
• Taxation policies are likely to affect men and
women differently, since they play different roles
in society and also demonstrate different
consumer behavior
• Concerns worldwide that tax policy is biased
against women because it tends to increase the
incidence of taxation of the poorest women while
failing to generate enough revenue to fund the
programmes needed to improve these women’s
lives
• Viewing taxation with a gendered lens can play a
role in promoting gender equality.
Gender bias in taxation
• Can be:
–Explicit: for example in procedure of
filling returns of income taxes;
differences in income tax reliefs
–Implicit: Not direct e.g. gender biases
in VAT and excise taxes resulting from
different consumption patterns
• Consider Kenyan case of income and
VAT
Gender bias in Kenyan Tax system –
Income taxes
• Consider evolution of income tax structure in Kenya
• Gender biases existed but have been corrected over
time
• For instance, in the 1960s and 1970s, women’s income
was lumped together with the husband’s for tax
purposes - income of a married woman was deemed to
be the income of the husband’s for the purpose of
determining his total annual taxable income
• PAYE for wife’s income deducted at source
• However, lumping together with husbands moved the
income into higher marginal tax bracket – liability paid
by husband
Gender bias in income taxes
• From 1978, burden shifted to wife – could be
deducted PAYE at higher rate
• In 1980, the wife’s employment income was
separated from the husband’s for tax purposes.
• The wife’s professional income was separated
from the husband’s income in 1988/89
• Currently, the wife and husband are treated
separately for tax purposes, even though there is
still an option of joint filing – does not move them
to higher marginal tax rates – gender bias in joint
filling eliminated
• Language in tax returns forms…assumes main
taxpayer is still male.
Gender bias in income taxes in Kenya
• In the 1960s and 1970s, exemptions and relief
varied according to the marital status of an
individual (married, single or special single—
single with children) and also the individual’s age.
• Only married men were treated as married, while
married women were in the category of singles.
• Reliefs unified in 1996-97- eliminated
discriminatory element.
• Allowances varied by number of children and
only given to men but unified in late 70s to
remove discrimination.
Value added Tax
• Biases are implicit
• Depend on consumption patterns (at
household level – male headed vs female
headed households)
• Use household survey data to analyze
consumption patterns and compute VAT
burden
Consumption patterns by gender
Household Group
Male 1st Quintile
Male 2nd Quintile
Male 3rd Quintile
Male 4th Quintile
Female 1st Quintile
Female 2nd Quintile
Female 3rd Quintile
Female 4th Quintile
Agricultural
products
45.2
46.1
41.9
27.7
47.3
44.1
36.6
31.6
food
34.2
29.3
28.0
19.0
31.7
31.2
26.6
23.0
non food
20.6
24.6
30.1
53.3
21.0
24.7
36.8
45.4
Percent
17.8
17.4
17.2
17.0
17.2
17.1
16.8
16.8
16.6
16.4
16.9
Percent
VAT burden without exemptions and
zero-rating
Fe m
ale
1st
Qu
in t
Ma
ile
le 1
st Q
Fe m
uin
tile
ale
2nd
Qu
inti
Ma
le
le 2
nd
Q
u in
Fe m
tile
ale
3rd
Qu
int
Ma
ile
le 3
rd
Qu
Fe m
int
ile
ale
4th
Qu
inti
Ma
le
le 4
th
Qu
inti
le
Fe m
ale
1st
Qu
in t
Ma
ile
le 1
st Q
Fe m
uin
t ile
ale
2nd
Qu
inti
Ma
le
le 2
nd
Qu
Fe m
inti
ale
le
3rd
Qu
int
Ma
ile
le 3
rd
Q
Fe m
uin
tile
ale
4th
Qu
inti
Ma
le
le 4
th
Qu
inti
le
VAT burden by gender
VAT burden with exemptions and zerorating
17.6
5.5
17.5
6.0
17.6
17.2
5.0
17.0
4.0
3.8
2.8
3.0
3.0
3.7
2.9
3.0
2.0
1.0
0.0
5.5
Gender and taxation in SA
• During the apartheid years, tax system was
discriminatory on grounds of both gender and
marital status, through the tax schedule
definitions and application of the primary rebate
and retirement annuities contribution deductions.
• From March 1995, a single tax structure was
imposed on all individuals irrespective of gender
or marital status, a single primary rebate (for
those under 65 years) introduced, and the
differences in retirement annuity deductions
removed. The rebate for dependents was also
removed.
• Provisions put an end to formal, explicit gender
discrimination in the tax system.
Gender & tax in SA
• Does removal of gender and marital discrimination
to allow for single filing as opposed to joint filing
results in a system which is overall more equitable.
• Consider hypothetical example
• Household 1 consists of a husband, wife and their
two children. The husband earns R2 000 per
month and the wife earns R1 000 per month.
Household 2 consists of an employed woman who
earns R3 000 per month, the woman’s nonearning mother, and the woman’s two children.
Gender & tax in SA
• Earlier tax regime attempted to place these two
households in more or less equal positions given their
seemingly equal needs, but with some reduction in tax
for the married couple so as not to discourage
women’s employment.
• After removal of discrimination on the basis of gender
and marital status, and using the 1999/2000 tax tables
the first household pays R850, while the second pays
more than four times as much, at R3 460.
• Appears that formal discrimination on the basis of
gender and marital status has been replaced with more
severe indirect discrimination against some of those
who do not conform to a nuclear family model
Gender & tax in SA
• Standard Income Tax on Employees (SITE) assumption of consistent monthly earnings would disadvantage groups such as the many
women who have seasonal work
• Women more likely than men not to work a
full year because of reproductive roles
Overall incidence
Total Tax VAT Excise Tax Fuel Tax
Distribution
Employment Categories
Male breadwinner
9.36
7.36
1.12
0.88
26.4
Female breadwinner
8.14
7.05
0.45
0.64
21.6
Dual earner
9.15
7.13
0.89
1.14
24.2
None employed
7.84
6.99
0.49
0.37
27.8
Male-headed
9.06
7.17
0.96
0.94
59.1
Female-headed
7.99
7.08
0.44
0.48
40.9
Headship
Incidence Indirect tax incidence
• Total indirect tax incidence is lower in femaletype households than in male-type households
• For each R1 of expenditure male majority
households pay 9.23 cents in VAT, female
majority households spend 8.13 cents on VAT
• Excise taxes – higher burden on male headed
households because of consumption patterns
(especially alcohol, tobacco and fuel
Conclusion
• Most explicit biases have been removed
through reforms in tax systems
• Implicit biases still exist in some tax systems.
• Need for detailed analysis of tax systems to
identify biases and propose relevant
recommendations.
Thank You
Asante