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Tax Policy and Gender Equality :- 22 countries have implemented specific tax reforms to improve gender equity.

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Promoting gender equality, as reflected in the Universal Declaration of Human Rights and the Sustainable Development Goals, is a human rights objective for many governments, including in G20 and OECD countries.

Improving gender equality is not only an issue of fairness but can also produce a significant economic dividend. Working towards more inclusive economies in which women participate fully is important for economic growth and, in the context of the COVID-19 pandemic, will be crucial in ensuring an inclusive and robust recovery. Research shows that improving gender equality and reducing gender-based discrimination can generate substantial economic benefits, by increasing the stock of human capital, making labour and product markets more competitive, and increasing productivity.

Tax policy can contribute to gender equality and to governments’ efforts to reduce inequalities. A growing body of research shows that even in tax systems that do not include overt gender biases, other implicit biases exist due to the interaction of the tax system with differences in the nature and level of income earned by men and women, consumption decisions, the ownership of property and wealth, and the impact of different social expectations on male and female taxpayers.

Against this background, governments can act to improve the gender outcomes of taxation; removing overt biases and reconsidering tax settings that currently result in implicit gender bias; and evaluating avenues within the tax system to design and implement tax policy that promotes gender equality.

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The first analysis of its kind

The report Tax Policy and Gender Equality: A Stocktake of Country Approaches is the first cross-country report to analyse national approaches to tax policy and gender outcomes, including assessments of explicit and implicit biases, tax policy reforms to improve gender equity, and policy processes and priorities. Covering 43 countries from the G20, the OECD and beyond,1 this report has been prepared as part of the OECD’s efforts to mainstream gender equality and will be presented to the G20 Finance Ministers and Central Bank Governors in February 2022.

This report focuses on various aspects of tax policy design and implementation, on a cross-country basis. It explores the extent to which countries consider gender equality in tax policy development and tax administration, how they address explicit and implicit gender biases in their tax systems, and the availability and use of gender-disaggregated data. It analyses country perspectives on how and to what extent gender should be taken into account in the tax policy development process (including via gender budgeting). It also takes stock of the impact of the COVID-19 pandemic on gender equality in the tax system and highlights how countries considered gender outcomes in their tax responses to the pandemic.

Key findings and country priorities

The report finds that gender equality is an important consideration in tax policy design for most countries, and that about half of them have already implemented specific tax reforms to improve gender equity, most commonly in the taxation of personal income.

Although few countries noted examples of explicit bias in their tax system, more than half of the countries indicated that there was a risk of implicit bias. As with explicit biases, these implicit biases can either exacerbate or reduce gender inequalities already present in society and the examples noted by countries suggest a more nuanced policy response to gender bias in taxation is needed.

Most countries have access to gender-differentiated data for policy analysis, but access to data is concentrated on male and female incomes and labour market participation. Detailed data on consumption and on property and wealth ownership is less commonly available and was identified by several countries as a key data gap.

Finally, countries indicated that aspects of labour taxation were the key priority for future work to improve tax systems to increase gender equality. Identified policy areas include the impact of tax credits and allowances on gender equality, the taxation of second earners, the relationship between the progressivity of the tax system and gender equality, and the impact of social security contributions. A secondary priority is work on identifying the policy rationales and an assessment framework for considering the use of explicit biases to reduce gender inequality. Another common priority is exploring gender bias in the taxation of capital income and capital gains, notably in wealth and inheritance taxes.

Taking the work forward

There are many implications for policymakers. A useful step for countries to further address the impact of implicit bias in their tax systems is to provide more guidance on taking gender equality into account in tax policy design and tax administration. Consideration of the impact of changes in the tax structure over time is also important to assess. In addition, the report highlights the need to improve the collection of gender-disaggregated data on taxation in general, and on men and women’s consumption and property and capital ownership in particular, to facilitate deeper analysis of the impact of taxation on these issues.

Going forward, analysis of the gender equality implications of tax policy could build on the conclusions of the report, including through further investigation of the priorities identified by countries, with a view to deepening the analysis and identify best practices. This work could focus on identifying principles and best practices in tax systems to improve gender equality, including whether and to what extent the tax system itself can be used as a tool to reduce bias, when assessed against alternative policy tools. Further work could also focus on the overarching impact of labour taxation on gender inequality, with a particular focus on removing disincentives that discourage women from working, especially on a full-time basis.

Conclusions and implications

The impact of taxation on gender outcomes is widely considered to be important across the countries surveyed. Three-quarters of the 43 countries who responded consider tax & gender to be at least somewhat important (Figure 3.1), with eight of these countries considering it to be very important. Twenty-two countries indicated that they have implemented specific tax reforms to improve gender equity. These measures have typically been implemented in the personal income tax system, either via changes to the unit of taxation or administration or the inclusion of credits or allowances, although several countries have also introduced zero or reduced VAT rates for sanitary products with the goal of improving the gender impacts of the tax system.

Few countries noted examples of explicit bias in their tax system, either now or on a historic basis, also most commonly in the personal income tax system. The differences in the taxation of men and women that were noted more commonly provided a tax benefit to women rather than men; for example, in Hungary, a tax allowance is targeted at mothers of more than four children; whereas in Israel, extra tax credit points are available to mothers.

More than half of the countries surveyed (23 countries) indicated that there was a risk of implicit bias in their tax systems, although only 16 countries reported having assessed this. The implicit biases noted by countries were seen to arise from five common gender differences between men and women (Box 1): differences in the level of income between men and women; differences in the nature of income between men and women; the taxpayer unit used in personal income taxation; differences in consumption patterns; and differences in expectations regarding social roles.

As with explicit biases, these implicit biases can occur to the detriment of either gender, depending on how the tax system interacts with these underlying characteristics. For example, the progressivity of the tax system provides a lower tax burden for lower income earners – typically women – while at the same time, producing disincentives in household-based tax systems for second earners to work.

Within both of the explicit and implicit gender bias categories, countries noted examples that either reduced gender bias, or increased it. Based on these different examples, a further disaggregation of the implicit and explicit framework could be considered, as set out in Table 4.1.

Nineteen countries reported using gender budgeting in their country, with five of these countries noting that the gender budgeting framework included specific considerations for tax purposes. Two countries are considering introducing a gender budgeting framework in the near future. Of the countries currently using gender budgeting, the most common basis for this is a high-level political appointment, followed by a specific legislative provision via budget or other law. Three countries reported that this was a constitutional requirement.

Table 4.1. An expanded typology of explicit and implicit bias

Explicit

Implicit

Exacerbate gender bias

Provisions in the tax code, or in formal administration requirements, that explicitly reference gender, and which worsen gender biases present in society.

E.g. lower tax rates for married men; tax credits available for men; women not having access to their tax info.

Policy response: Remove.

Tax settings that are gender neutral, but which interact with the different economic and social realities of men and women in ways that worsen gender biases present in society.

E.g. higher tax rates on second earners, informal taxation or user fees on services used more by women, low rates of taxation on capital income or wealth.

Policy response: Reconsider.

Reduce gender bias

Provisions in the tax code, or in formal administration requirements, that explicitly reference gender, but which reduce gender biases present in society.

E.g. lower property tax or inheritance rates for women, tax credits for working mothers.

Policy response: Evaluate.

Tax settings that are gender neutral, and which interact with the different economic and social realities of men and women in ways that reduce gender biases present in society.

E.g. Improving progressivity of the tax system, reducing disincentives for low income earners to work, broadening tax bases to include capital income.

Policy response: Promote.

Source. OECD.

Few countries systematically analyse the impact of tax administration or compliance on gender. The overwhelming majority of countries indicated that they have not designed or implemented analyses on the gender impact of tax administration and compliance measures, nor adjusted their tax administration processes.

Most countries have access to some gender-differentiated data for policy analysis, with 25 of the 43 respondents indicating this. Access to data is concentrated on male and female incomes and the labour market: detailed micro-data on male and female incomes is available in 24 of the 43 countries surveyed and 17 have access to information on male and female labour force participation. Detailed data on consumption (seven countries) and on property and wealth ownership (ten countries) disaggregated by gender is less commonly available.

Finally, countries indicated a number of priorities for future work. The most common preference was for future OECD work to consider the impact of tax credit or tax allowance provisions on gender equity. A secondary priority was the design of explicit tax biases designed to reduce gender inequalities (Figure 3.10). There was also a strong desire for further work to focus on other labour tax issues, with the impact of taxes on second earners, the progressivity of PIT systems, and the impact of tax credits and allowances on gender, among the top four options for future work. A third priority for future work indicated by countries was exploring gender bias in the taxation of capital income and capital (e.g. wealth and inheritance taxes).

Responses to the survey highlight varying degrees of priority and assessment of gender outcomes in tax policy design across the countries surveyed. Key areas where implicit biases were seen to exist in many countries include differences in the nature and level of income, consumption decisions, and the impact of social roles on the outcomes of the tax system. Further analysis could be pursued to improve the awareness of gender biases in country tax systems, in particular implicit ones, with a view to better assess their impact and reduce them as needed. While many countries indicated that gender is taken into account in their tax policy process, this is not a formal requirement in many countries and guidance is rare. A useful step for governments wishing to further address the impact of implicit bias in their tax systems could be to consider guidance on how to take gender into account in tax policy design, as well as for tax administration purposes. Consideration of the impact of changes in the tax structure and mix are also important to assess for their impact on gender outcomes. When available, gender-disaggregated data is useful to understand possible biases and gender-specific patterns. The survey has also highlighted the need to improve data collection on men and women’s property and capital ownership, in order to facilitate deeper analysis of these issues, which is one of the priorities for future work.

Note

← 1. Argentina, Australia, Austria, Belgium, Brazil, Canada, Costa Rica, Croatia, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Kenya, Latvia, Luxembourg, Mexico, Montenegro, Netherlands, New Zealand, Norway, Peru, Portugal, Romania, San Marino, Saudi Arabia, the Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Tunisia, Ukraine, United Kingdom, United States and Uruguay.

OECD (2022), Tax Policy and Gender Equality: A Stocktake of Country Approaches, OECD Publishing, Paris, https://doi.org/10.1787/b8177aea-en.

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