OPINION: Why the VAT exemption on menstrual pads should be kept
It has now been almost one year since the government of Tanzania made the momentous decision to remove value-added-tax (VAT) from imported sanitary products, thus symbolising its commitment to supporting women and girls manage their menstruation in a safe and dignified manner.
The decision made Tanzania a pioneer in the region on menstrual health policy, joined by a handful of other countries such as South Africa, Botswana and Kenya.
Unfortunately, the VAT removal has not helped to reduce the prices of menstrual products for the majority of consumers in the country and this month (May) the government through the deputy minister for Finance and Planning, Ms Ashatu Kijaji, indicated its intention to review the VAT exemption on sanitary towels.
The assumption is that the exemption benefits importers at the expense of women and girls. The reality however, as we have learnt, is much more complex.
Many menstrual product companies did in fact reduce their wholesale and recommended retail price as a response to the VAT exemption.
However, over 90 per cent product sales are through small shops via multiple intermediaries, with distribution chains that cover large distances to reach consumers.
Each channel partner incurs transportation and distribution costs and adds margins to their services, increasing the price of the product significantly from manufacturer to consumer.
Ordinarily the retailer makes the largest margin in the chain, carries the greatest risk in terms of cost of inventory, and has a large influence over the final price, contrary to the manufacturers who in the current market setup has very little control over retail price.
Minimum awareness on menstruation, and why menstrual products are more of public good, attracts a so-called ‘pink tax’, a phenomenon seen as a form of gender-based price discrimination, where products and services marketed for women are generally more expensive than equivalent products and services directed to men.
On its own therefore, the VAT exemption will not lead to lower retail prices. There is a need to have other complimentary efforts such as for product firms to include indicative prices on menstrual products, and retailers to adhere to those prices.
Ideally, this should be accompanied by a joint national campaign between the government, manufacturers and other actors on menstrual hygiene management which will appeal to the retailers on why menstrual products are a public goods and thus should be sold at the indicative prices, and to consumers to be aware of what price they should pay.
Other actors can also contribute, for example, by providing free transportation of the products especially to more remote areas.
Apart from sanitary towels there are other menstrual products which are more affordable, sustainable and environment friendly.
Reusable pads are sold almost at the same price as disposable pads, but they can be used for about two to five years. Menstrual cups are sold at a higher initial investment but can be used up to ten year.
Reusables and menstrual cups are not VAT exempted, suggesting that they could be sold at a lower price if included in the VAT exempted products. Local entrepreneurs are also encouraged to think of low-cost local production methods for sanitary towels as these would reduce import cost and add competition to existing brands
VAT exemption on sanitary towels has been a bold move by our Government in support of women and girls rights. It is also a sensible economic move and will accelerate Tanzania’s national growth rates.
The World Bank estimates that with every 1 per cent increase in proportion of women with secondary education, a country’s annual per capita income grows by 0.3 per cent.
Towards Menstrual Hygiene Day coming this May 28, our humble appeal is that ten months is not enough to measure success of VAT exemption on sanitary towels.
More time and other complementary and deliberate efforts by the government, products companies and other actors are needed to ensure access to affordable and quality menstrual products by majority of women and girls especially those from rural setting and those that are living with disabilities.
Anna Bwana wrote this piece on behalf of the Menstrual Hygiene Management (MHM) consortium