Supermarkets under fire for not passing sanitary products tax savings

Supermarkets have been accused of not passing the benefits from the UK scrapping its “tampon tax” on women’s sanitary products, prompting calls for better use of taxation to protect consumers. 

According to an analysis of Office for National Statistics data by the Tax Policy Associates think-tank reported by Financial Times, the price of sanitary products fell 1 per cent (at most) after the removal of a 5 per cent VAT on these items in January 2021.

The findings, released on Thursday (10), have raised questions over whether tax cuts are the best way to protect consumers from rising prices as the cost of living crisis deepens. 

“The remaining 80 per cent of the benefit [of removing VAT has been] retained by retailers and or suppliers. More likely, the retailers and or suppliers took all the benefit — amounting to £15mn each year,” Financial Times quoted from the report. 

The UK scrapped its so-called tampon tax at the end of the Brexit transition period — the EU had required member states to tax tampons and sanitary towels at a minimum of 5 per cent. Brussels dropped this requirement in April this year. 

Women’s rights activists have for years argued that taxing menstrual hygiene products, whose use is essential, places an unfair burden on women, especially those who may struggle to afford them. 

Some policymakers have advocated tax cuts on certain products and services, such as hospitality and fuel, to help stimulate spending over the Covid-19 pandemic and to alleviate cost of living pressures. 

But the report said that policymakers “should be sceptical of those making proposals for cuts in VAT and duties, particularly if claims are made that this will benefit consumers, and or those on low incomes”. 

“If we want to support those who can’t afford to pay, then the answer is to put cash directly in their hands (through the tax and benefits system), or in some cases (perhaps such as this) provide free or subsidised products,” it continued. 

Margaret Hodge MP, chair of the parliamentary group on responsible tax, said: “It beggars belief that in the midst of a cost of living crisis miserly retailers and global multinationals are choosing to hoard tax savings on sanitary products.” 

The government said: “We have kept our promise to scrap the tampon tax to make sanitary products more affordable and urge retailers to pass the savings on to shoppers.”