Tax policy and gender disparity: A call to action on International Women’s Day 2024

The theme for International Women’s Day 2024 is “Inspire Inclusion”, focusing on understanding, valuing women’s inclusion, belonging, relevance, and empowerment.

As a young law student, veritable decades ago, my least favourite subject was tax law. It was binary and dreary and abstract; mathematical and clinical and soulless. It’s rather ironic, then, that I ended up spending the best part of 3 decades working in the tax space, much of that focusing on compliance and abusive tax practices, and getting taxpayers to do the right thing. I was wrong: tax is fun!   

Alongside this, when I started studying fundamental human rights as a masters’ student, it resonated far more deeply with me: it had meaning, it represented compassion and empathy, seeking to transform the world in the most basic of ways. It concretised the philosophy that there are certain rights that are so fundamental to our human being-ness, that they are inalienable, and worth protecting.  

But back then, as a young lawyer, and today still, as a less-young consultant, the lack of strong female voices in the tax policy space is striking. 

From a tax policy perspective, it is a double-edged sword that sees women feeling the pinch from two sides: 

Women are direly under-represented in the tax policy and tax administration space

Around the world, only some 11.3% of finance ministers are female. 

In tax administrations, female staff make up some 58% of staff, but only 43% of executives. Indeed, after 30 years in the business, I have only ever met two female heads of a tax administration, and I have only ever worked with two other female consultants in the tax administration consulting space. 

Spanish Minister of the Economy Nadia Calviño refused to take a promotional photo at the Madrid Leaders Forum, where she was the only woman in the line-up. She noted, “We can no longer consider it normal that 50% of our population is not present,” and that she would no longer participate in events if she was the only woman present.

Impact on tax policy

The historically limited role that women have played in the tax policy and tax administration space – at a senior leadership level – continues to be evident in our tax policies today.

There are a multitude of examples of tax policies downgrading women to second class citizens. For the longest time, for instance, women were required to submit their tax returns under their husbands’ names. While some countries took an early lead in levelling the field a bit (eg Germany in 1958 and Sweden in 1971) many other countries have a relatively recent history of making women play second fiddle to their husbands (eg the UK until as recently as 1990 and France until 2013.) In South Africa, married women were taxed at a higher rate than married men, until 1995. 

These kind of biases continue to exist today, as a report on tax policy and gender equality notes: in tax systems that do not account for the gender wage gap; in tax systems favouring capital income through lower rates or exemptions that inadvertently favour men; in joint or household-based taxation that discourage the second earner, typically a woman, from working, due to higher effective tax rates on their income; in VAT and sales taxes that disproportionately affect women if there are no adjustments for gender-differentiated consumption patterns; and in biases in tax incentives or credits for unpaid childcare or care duties if they do not equally incentivise both genders to participate in these roles.

As Christine Lagarde notably said, “Being surrounded by men is not something new, but it is something that is always disappointing.” Not least, perhaps, because the policies a male-dominated space have delivered have negatively impacted half of the world’s population. 

A care sector that couldn’t care less 

Alongside this, many women continue to be impacted by the motherhood penalty – the price we pay for choosing the welfare and wellbeing of our children over our own careers. (Not to say that there aren’t many men out there who do the same – just that women often continue to be forced to make this choice by default.)

Many women continue to be disproportionately impacted by the care burden – having to look after the frail, the sick and the otherwise homebound. Women perform 76.2% of all unpaid care work globally – 3.2 times more than men. This equates to 16.4 billion hours of unpaid care work daily, with an economic value of 9% of global GDP. Women provide an estimated 71% of informal dementia care hours globally. 

An older Pew Research Center report show how mothers were much more likely than fathers to report experiencing significant career interruptions in order to attend to their families’ needs: among working parents of children younger than 18, working mothers spent 10.7 hours per week actively engaged in childcare, compared with fathers’ 7.2 hours. When asked what is best for young children, 33% said what’s best for young children is to have a mother who doesn’t work at all.

Mothers (and fathers!) should never need to make a choice between having to sacrifice their lives for the sake of caring for others. Mothers (and fathers) should never have to give up on their dreams and aspirations and financial security, just because they have to – instead – stay at home to look after a sickly toddler or frail parent or partner with dementia. In many countries, women are exiting the labour market to care when, quite simply, they should never be forced to choose between education, a job or caring for a loved one.

(To be clear: many people thrive on providing care, finding their calling in looking after others. But for them this is a choice they make. For them it is a space in which they find fulfilment. The argument here is not that care work is “less than” – far from it. It is simply that no one should be forced to become a carer simply because there is no care system.)

These biases translate into a care sector that couldn’t care less.

A Brazilian study explored the effects of tax reforms on care provision, contrasting tax incentives with direct government spending on care infrastructure. The study highlighted how public investment in care services like daycare and elderly care, significantly reduced women’s care burden and created employment opportunities, particularly benefiting those from lower income brackets. Their analysis showed how public spending on care services more effectively addresses inequalities, generating 55% more employment opportunities for women.

Taxation can provide sustainable funding to public caregiving systems that redistribute and reduce care burdens. Every second, we lose a nurse’s yearly salary to a tax haven. St. Andrews University has estimated that the taxes we lose to tax havens could employ some 1,950,000 additional nurses every year. If governments cracked down on tax abuse, 31.9 million more people would have access to basic sanitation, 15.2 million more people would have clean drinking water, and 3.2 million more children would be able to attend an extra year of school. Every single one of these dynamics would look significantly different if our governments had the tax revenue to spend on them. These are all measures that would quantifiably improve the lives of a multitude of women across the world.

Something needs to change

A recent OECD report gives some hope, with gender equality being recognised as an important consideration in tax policy design by a majority of countries, with around half implementing specific tax reforms to enhance gender equity. However, there’s a notable divide in the availability and use of gender-disaggregated data for policy analysis. The report suggests a growing awareness among countries of the potential for tax policies to inadvertently perpetuate gender disparities, alongside a recognition of the economic benefits of reducing gender-based discrimination. The report emphasises the need for targeted research to further understand the gender implications of tax systems, suggesting improvements in data collection and analysis to support evidence-based policymaking. It advocates for the removal or adjustment of tax policies that exacerbate gender bias and encourages the exploration of tax settings that could reduce gender inequalities. 

A fundamental change is already underway in terms of moving towards more inclusive tax policy development, with discussions on a UN-backed tax convention. As that process unfolds, the world has an opportunity to bring greater equity to our tax policies, in a way that is mindful of the impact these policies often have on those who aren’t seated around the table.  

What if we all paid our fair share? 

This is not the world we want – philosophically, or practically. 

On International Women’s Day, the call is a simple one: 

• Advocate for gender-disaggregated data in tax policy analysis, coupled with impact analysis to bring about cohesive, progressive reform;
• Stop the leaking pipeline: we need more women in leadership roles in the tax policy space; and 
• Support the calls for real change to the way global tax policy is developed, to ensure greater transparency and less hiding space for big fish, including a UN-backed tax convention; the automatic exchange of information between tax administrations; transparency of beneficial ownership; public country by country reporting; global and regional asset registers for significant assets; a global minimum tax; and unitary taxation.  

The very fundamentals of our human-ness are at stake. Because there are no fundamental rights, without fundamental fairness in how taxes are paid – by men, and by women.