Although men and women are typically taxed under the same rules, their different social and economic characteristics (e.g. income levels or labour force participation) mean that the tax system can inadvertently contribute to gender inequalities in society. Understanding and improving the impact of taxes on gender equality is a key dimension that governments need to consider as part of tax design to support inclusive growth. This report provides the first cross-country overview of governments' approaches to tax policy and gender, including reforms undertaken to date and potential areas of explicit and implicit gender bias. Covering 43 countries, it also explores the extent to which governments take into account gender implications in policy development, gender considerations in tax administration and compliance, and the availability and use of gender-disaggregated data. Finally, it also discusses priorities for further work on tax policy and gender issues.
Tax Policy and Gender Equality
Abstract
Executive Summary
Promoting gender equality, as reflected in the Universal Declaration of Human Rights and the Sustainable Development Goals, is a human rights objective for many governments, including in G20 and OECD countries.
Improving gender equality is not only an issue of fairness but can also produce a significant economic dividend. Working towards more inclusive economies in which women participate fully is important for economic growth and, in the context of the COVID-19 pandemic, will be crucial in ensuring an inclusive and robust recovery. Research shows that improving gender equality and reducing gender-based discrimination can generate substantial economic benefits, by increasing the stock of human capital, making labour and product markets more competitive, and increasing productivity.
Tax policy can contribute to gender equality and to governments’ efforts to reduce inequalities. A growing body of research shows that even in tax systems that do not include overt gender biases, other implicit biases exist due to the interaction of the tax system with differences in the nature and level of income earned by men and women, consumption decisions, the ownership of property and wealth, and the impact of different social expectations on male and female taxpayers.
Against this background, governments can act to improve the gender outcomes of taxation; removing overt biases and reconsidering tax settings that currently result in implicit gender bias; and evaluating avenues within the tax system to design and implement tax policy that promotes gender equality.
The first analysis of its kind
The report Tax Policy and Gender Equality: A Stocktake of Country Approaches is the first cross-country report to analyse national approaches to tax policy and gender outcomes, including assessments of explicit and implicit biases, tax policy reforms to improve gender equity, and policy processes and priorities. Covering 43 countries from the G20, the OECD and beyond,1 this report has been prepared as part of the OECD’s efforts to mainstream gender equality and will be presented to the G20 Finance Ministers and Central Bank Governors in February 2022.
This report focuses on various aspects of tax policy design and implementation, on a cross-country basis. It explores the extent to which countries consider gender equality in tax policy development and tax administration, how they address explicit and implicit gender biases in their tax systems, and the availability and use of gender-disaggregated data. It analyses country perspectives on how and to what extent gender should be taken into account in the tax policy development process (including via gender budgeting). It also takes stock of the impact of the COVID-19 pandemic on gender equality in the tax system and highlights how countries considered gender outcomes in their tax responses to the pandemic.
Key findings and country priorities
The report finds that gender equality is an important consideration in tax policy design for most countries, and that about half of them have already implemented specific tax reforms to improve gender equity, most commonly in the taxation of personal income.
Although few countries noted examples of explicit bias in their tax system, more than half of the countries indicated that there was a risk of implicit bias. As with explicit biases, these implicit biases can either exacerbate or reduce gender inequalities already present in society and the examples noted by countries suggest a more nuanced policy response to gender bias in taxation is needed.
Most countries have access to gender-differentiated data for policy analysis, but access to data is concentrated on male and female incomes and labour market participation. Detailed data on consumption and on property and wealth ownership is less commonly available and was identified by several countries as a key data gap.
Finally, countries indicated that aspects of labour taxation were the key priority for future work to improve tax systems to increase gender equality. Identified policy areas include the impact of tax credits and allowances on gender equality, the taxation of second earners, the relationship between the progressivity of the tax system and gender equality, and the impact of social security contributions. A secondary priority is work on identifying the policy rationales and an assessment framework for considering the use of explicit biases to reduce gender inequality. Another common priority is exploring gender bias in the taxation of capital income and capital gains, notably in wealth and inheritance taxes.
Taking the work forward
There are many implications for policymakers. A useful step for countries to further address the impact of implicit bias in their tax systems is to provide more guidance on taking gender equality into account in tax policy design and tax administration. Consideration of the impact of changes in the tax structure over time is also important to assess. In addition, the report highlights the need to improve the collection of gender-disaggregated data on taxation in general, and on men and women’s consumption and property and capital ownership in particular, to facilitate deeper analysis of the impact of taxation on these issues.
Going forward, analysis of the gender equality implications of tax policy could build on the conclusions of the report, including through further investigation of the priorities identified by countries, with a view to deepening the analysis and identify best practices. This work could focus on identifying principles and best practices in tax systems to improve gender equality, including whether and to what extent the tax system itself can be used as a tool to reduce bias, when assessed against alternative policy tools. Further work could also focus on the overarching impact of labour taxation on gender inequality, with a particular focus on removing disincentives that discourage women from working, especially on a full-time basis.
Note
← 1. Argentina, Australia, Austria, Belgium, Brazil, Canada, Costa Rica, Croatia, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Kenya, Latvia, Luxembourg, Mexico, Montenegro, Netherlands, New Zealand, Norway, Peru, Portugal, Romania, San Marino, Saudi Arabia, the Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Tunisia, Ukraine, United Kingdom, United States and Uruguay.
