There are a number of frameworks used in the literature in assessing the impact of taxation on gender outcomes. One of the most common of these, initially developed by (Stotsky, 1996[1]), is to differentiate between tax systems that directly differentiate tax treatments based on gender as an explicit criterion, and those that do not but which interact with societal or economic differences between men and women in such a way that the tax system has a differing impact on men and women. (Gunnarsson, Spangenberg and Schratzenstaller, 2017[2]) note that this distinction broadly corresponds to the legal concept of direct and indirect discrimination, whereby “Direct (sex) discrimination is generally defined as less favourable treatment with an explicit distinction between different sexes. Indirect discrimination refers to apparently neutral provisions, criteria or practices which (might) result in a particular disadvantage for a person of one sex compared to a person of the other sex, due to existing socioeconomic differences.”
Explicit bias, most commonly related to personal income tax (PIT), occurs where the tax code provisions are legally linked to gender: for instance, the allocation of exemptions, deductions and tax preferences related to spouses, or the responsibility for filing the tax return, as described in (Stotsky, 1996[1]).
Implicit bias, by contrast, occurs even if the tax system is ostensibly neutral and does not differentiate explicitly between men and women. Rather, implicit bias arises when a gender-neutral tax system interacts with differences in underlying economic characteristics or behaviours between men and women – including income levels, labour-force participation, consumption, ownership, entrepreneurship, savings, tax morale and compliance – in ways that reinforce gender biases. (Barnett, Grown, 2004[3]) consider that gender differences in economic activity can be divided into four main groups: i) gender differences in paid employment, (ii) women’s work in the unpaid care economy, (iii) gender differences in consumption expenditure, and (iv) gender differences in property rights and asset ownership.
Possible implicit biases can occur across all different tax types, including via taxes on labour, consumption, corporate and capital taxation. In addressing these implicit, or indirect, biases it is important to look beyond the apparent neutrality of the tax law to assess the impact of the law with the different socioeconomic realities of men and women (Gunnarsson, Spangenberg and Schratzenstaller, 2017[2]).
In practice, much work on analysing implicit biases has focused on aspects of the PIT. The OECD has also carried out analysis in this area, including via the Taxing Wages models (OECD, 2021[4])and the OECD-Tax Benefit indicators (OECD, 2021[5]), which also cover various benefits affecting work incentives in addition to tax measures. (Thomas and O’Reilly, 2016[6]) and (OECD, 2016[7]) (OECD, 2016[8]) highlight how various tax design features create greater labour participation disincentives for second earners (often women) than for primary earners or single individuals, therefore, raising gender equality concerns. More generally, the OECD has noted the importance of gender equity being embedded in tax policy design as “an integral part of an inclusive growth tax policy agenda” (Brys et al., 2016[9]) (OECD, 2017[10]).
The composition of revenue taxation across different tax types can also have an impact on gender equality, particularly on a dynamic basis. This occurs via the differing impacts of various types of taxes on equity and the economic incentives provided to different taxpayers. The progressivity of the overall tax mix can reduce the tax burden on the lowest-paid, benefiting women. By contrast, low levels of taxes on capital income or on capital, or high levels of tax on consumption, can have the opposite impact. For example, (Gunnarsson, Spangenberg and Schratzenstaller, 2017[2]) note that changes in the EU since 1995 have likely shifted the tax burden in the EU towards women, given the long-term trends observed on the reduction in progressivity of personal income and wealth taxes, the decreasing tax rates on capital and corporate income, the increasing tax burden on labour incomes particularly in the low and middle income groups, as well as the higher use of consumption taxes in the tax mix.
Tax administration and compliance aspects can also have different outcomes for men and women. Tax administration processes can be more or less accessible for either gender, can be directed at a specific gender or in practice can be used by one gender more than another. The approach to tax compliance, fraud and avoidance behaviours can have gendered impacts depending on the programmes targeted, or if the approach differs depending on the gender of the taxpayer. For example, a focus on tackling fraud in relation to childcare provisions may have a deleterious effect on women’s labour market participation, relative to a focus on tackling fraud in other areas, as found in (Parlementaire Ondervragingscommissie Kinderopvangtoeslag, 2020[11]) In a number of countries, including developing ones, the levels of informality bring an additional challenge: user fees and informal taxes, often used to finance basic goods such as education, healthcare and water supply, can result in a significant financial burden on households.