Labor over the weekend pledged that if it wins the upcoming federal election it will amend the GST so that it no longer applies to women’s sanitary products, like tampons. From The ABC:
Opposition spokesperson for health Catherine King said tampons were a basic necessity for women.
“They cost women over $300 million each year, $30 million is GST,” Ms King said…
The ALP’s new policy is to make up for any shortfall to revenue by introducing the GST to a group of alternative medicines that were recently excluded from private health insurance rebates as they were not endorsed by the chief medical officer.
“What we have proposed is that the offset loss to the states on pads and tampons would be by applied to twelve natural therapies that are sometimes exempt to the GST such as herbalism and naturopathy,” Ms King said.
“This actually gives you the money to be able to replace that.”
Viewed in isolation, the proposal to exempt GST on tampons makes sense. Given that condoms and lubricants have no GST applied on their sales, then why should women be penalised for purchasing what is an unavoidable and necessary expense?
That said, there are many inconsistencies with the GST regime, whereby the exemptions list appears to have been drawn up in an ad hoc manner. For example, adult nappies are exempt whereas baby nappies are not. Do babies need nappies less than adults? I doubt it.
Rather than focusing on this single anomaly, Labor should instead push for holistic reform of the tax system.
Instead of removing GST on products on a case-by-case basis, the tax base should instead be broadened and the tax system made more efficient.
It has been well documented on MB that Australia’s existing tax structure is becoming increasingly narrow and unsustainable, and that personal income taxes will rise dramatically via bracket creep without reform (see below charts).
By contrast, indirect taxes – which are derived mostly from the GST – will shrink, as tax receipts grow by less than inflation due to the various exclusions on health products, education, and basic food (among other areas). Exempting tampons from GST would further exacerbate this downward trend.
