Questions and answers about coronavirus and the UK economy
Questions and answers about coronavirus and the UK economy

Will scrapping the tampon tax help to reduce period poverty?

The UK has recently scrapped its ‘tampon tax’. While this decision has been welcomed, its effects on prices and efforts to end period poverty have so far been minimal.

The start of January 2021 saw the abolition of the 5% ‘tampon tax’ in the UK – that is, the reduced rate of value-added tax (VAT) on many period products. Tampons, pads and alternatives, including the mooncup, are now tax-free, although other reusable products such as period pants remain taxed at 17.5%.

The move was strongly welcomed by many campaigners who saw it as a stand against sexism in the tax system. The UK joined several countries – including Australia, Canada, Colombia, India, Kenya and Rwanda – with tax-free tampons and pads. The European Union is set to follow in 2022.

The size of the tax reduction – and hence its potential impact on affordability – is small. Equally, there is no evidence that women are enjoying the benefit of any price reduction. In fact, the average price of a pack of 20 tampons increased from £2.06 in December 2020 to £2.08 in January 2021 – see Figure 1.

This contrasts with what happened 20 years ago when VAT on these products was lowered from 17.5% to 5%. Then, the average price fell immediately from £1.52 in December 2000 to £1.45 in January 2001 – although the 9% price reduction in 2001 compared with 2000 suggests that retailers did not pass on all of the tax reduction.

Figure 1: Tampon prices at the time of VAT changes

Source: Office for National Statistics data, available via Richard Davies

While taxes are important, they are not the only thing affecting changes in the price of tampons – see Figure 2, which shows the highs and lows over three decades:

  • A surge in the price of cotton in March 2011 drove up prices temporarily.
  • The exchange rate depreciation in 2008 saw the average price increase by 30% in a single year, marking the end of a seven-year period after the VAT reduction in which prices fell continuously (although depreciations in 1992 and 2016 did not have a similar effect).
  • Well before the recent abolition of VAT (from mid-2017 to mid-2018), the real price fell by 20%, bringing it back down to its 2000 level.

Figure 2: Real price per pack of tampons, 1990 to 2021

Source: Office for National Statistics data, available via Richard Davies
Notes: Red lines from left to right represent: (1) VAT reduction, (2) depreciation, (3) cotton price surge, (4) VAT abolition. January 2021 prices. Sterling depreciated by 25% against the dollar from late 2007 to early 2009. The price of cotton surged to $2 (from around 80 cents) in March 2011.

Abolishing the tampon tax is worth celebrating, but it is not a move that guarantees making period products more affordable. Other measures to make them freely available are important and, as has been highlighted by lockdown, ending period poverty is about making sure that people have access to the right information and education, as well as affordable products.

Author: Sarah Smith
Photo by Natracare on Unsplash
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