Who Benefits from Tampon Tax Repeal? Research Suggests It’s Not Customers

This article in Reuters has some fascinating coverage of emerging research on who benefits from tampon tax repeal. Here is an excerpt:

“People are using tea towels, T-shirts, socks, toilet paper,” said Tina Leslie, founder of Freedom4Girls, one of several charities that successfully lobbied the British government to scrap a 5% VAT rate on period products in 2021.

 

But two years on, many campaigners say the impact on prices has been disappointing.

 

The lion’s share of the saving has been retained by retailers, giving them an annual windfall estimated at about 15 million pounds ($18 million), according to research published in November 2022 by Tax Policy Associates, a nonprofit.

 

“At most, tampon prices were cut by around 1%, with the remaining 80% of the benefit retained by retailers,” said the study, which factored in the effect of inflation by tracking the prices of period products alongside other common hygiene goods.

 

A spokesperson for the Treasury said the government had kept its promise to scrap the tax, urging retailers “to pass the savings on to shoppers”.

 

Several large retailers, including the pharmacy chains Boots and Superdrug, told the Thomson Reuters Foundation they had cut the price of period products by 5% in January 2021 to reflect the VAT changes. Supermarket chain Waitrose said it had voluntarily reduced its prices four years prior to the tax cut.

 

But as British campaigners ratchet up pressure on retailers, experts say scrapping the tampon tax is unlikely to reduce prices without stringent controls to ensure implementation, such as detailed price research and monitoring companies for non-compliance.

 

“Tax policy changes alone are insufficient: They must be implemented fully, resourced adequately in terms of quality control, and (have the) price change monitored,” said Susan Fox, deputy director at consulting organisation Global Health Visions, in a 2020 study on tax advocacy of menstrual products.

 

Without that, tax cuts can fall flat.

 

In Tanzania, VAT was reinstated a year after sanitary pads were exempted after it became clear that suppliers were not passing lower prices to consumers.

 

Part of the problem is market domination by a few companies who control prices, experts say.

 

Always – which dominates the Kenyan pads market – maintained its prices while other brands set their pricing to align with it following the VAT cut, Fox’s study said.

 

Procter & Gamble, which owns the Always brand, did not reply to requests for comment. Other leading manufacturers contacted by the Thomson Reuters Foundation either declined to comment or said distributors and retailers were responsible for setting prices.