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FIFI PETERS: On paper it appears that men and women are taxed the same but, in reality, a greater tax burden falls on women and this is deepening the gender income inequality.
To discuss this further and what can be done to level the gender pay gap, I’m joined by Dr Lee-Ann Steenkamp, a senior lecturer in taxation at the Stellenbosch Business School. Ma’am, thanks so much for your time.
I found this study really interesting. In fact, a male friend of mine from university brought this to my attention. I’d like you to start off by helping us better understand the report. So explain the numbers to us and how women actually end up paying more tax than men.
Dr LEE-ANN STEENKAMP: Good evening, Fifi, and thank you so much for having me.
On the face of it there doesn’t appear to be any explicit gender discrimination. We do after all have a unisex income-tax table. That’s what I thought until I started with this research a few months ago, and what I’ve realised from doing a gender analysis on the tax statistics – which are released by the South African Revenue Service, Sars, each year – is that women still congregate in the lower income-tax brackets.
Over time, although the number of women who form part of the income-tax base has increased to about 46%, they contribute only one-third of the income taxes that are collected. So there’s definitely some discrepancy there, which led me to scratch a bit deeper.
The second thing I then realised is that, when you combine this information with the statistics from Stats SA, we see that there’s a significant number of households, more than 40% in fact, which are headed by female breadwinners.
Added to that is that women carry a much higher burden when it comes to child-rearing, especially single parents.
So 42% of children live with only their single mothers, versus 4% with only their single fathers. What this means is, when we combine these statistics, we see that although men and women are taxed equally, the underlying socioeconomic conditions mean that women earn less, they perform a lot more unpaid caring work, and they have to make their lower income stretch further to take care of children, elderly parents, and sick family members, for example.
FIFI PETERS: I see that the discrimination extends to even that. Explain how that happens.
Dr LEE-ANN STEENKAMP: That’s true. What the international research shows us is that in most developing countries lower-income women bear the highest brunt of value-added tax, or Vat. Again, this can be ascribed to the gender roles that men and women perform. Men are still seen traditionally as the breadwinner, women as the caregiver staying at home [and] taking care of the children.
So women then tend to spend their lower incomes more on the collective household goods – taking care of the children, paying the school fees, taking them to the doctor, etc. So the Vat burden then disproportionately falls on lower-income women versus men.
We do need more gender-disaggregated data to track the consumption patterns of men and women in South Africa, but this is what the overall statistics revealed to us.
FIFI PETERS: Just in terms of the broader tax implications on income specifically, where on paper it looks like we’re paying the same but in reality we’re not, is this unique to South Africa or is this happening everywhere else in the world?
Dr LEE-ANN STEENKAMP: It’s unfortunately not unique to South Africa at all. This is happening across the world and not just in developing or emerging economies. There are some interesting examples that I can refer listeners to if they care to download the Women’s Report, which is available for free. If you look at information from the Organisation for Economic Cooperation and Development, the OECD, the United Nations and the International Labour Organisation, we also pick up similar trends in many other countries.
Again, this can be ascribed to the prevailing gender pay gap, which has narrowed over time, fortunately.
But in South Africa there is still on average a 16% gender pay gap.
It varies from sector to sector. But, even more importantly, it’s a fact that women’s careers tend to be one-third shorter than those of men; women take career breaks to raise children. There are more women in part-time work than there are men. And all of these underlying factors combined filter through into our tax statistics and we can definitely see that from the gender-disaggregated information in the Sars statistics.
FIFI PETERS: All right. Solutions? You’re calling for affirmative action in favour of women for income-tax regulation. What does affirmative action in terms of taxes look like?
Dr LEE-ANN STEENKAMP: Well, firstly we need to understand that tax is part of fiscal policy, and fiscal policy is part of the country’s overarching macroeconomic policy. So it’s not as easy as just asking government to tweak the tax laws a bit in favour of women. The government has different targets that it needs to realise to balance inflation with the country’s borrowings and interest rate, etc. But we need to get this conversation started, and we definitely need more research on this. I’ve barely scratched the surface of this research.
Taking a pragmatic approach, I think there are some immediate things that Treasury could investigate. For example, adding more items to the zero-rated list in the Vat Act, especially targeting those goods that lower-income households, especially single parents, tend to purchase, and then also considering reintroducing a tax rebate for childcare costs – which we had in the previous tax dispensation under the apartheid regime.
In the United States, for example, taxpayers can get a tax rebate which reduces your tax liability for some childcare costs, after-school care, transport to and from school – which we currently don’t have.
I think that would go a long way towards alleviating the burden, especially on single parents and even more on single mothers.
FIFI PETERS: You even suggest interventions such as a higher tax threshold for women, tax breaks for female-owned businesses, and reduced tax rates on property owned by women. You did allude to [it being] part of broader fiscal policy, so it could be quite complex to implement, but are some of these things being done elsewhere? Do we have a practical example that we can use as best practice?
Dr LEE-ANN STEENKAMP: Yes, that’s how I came up with a suggestion. So when I did my literature review, looking at what other countries are doing I identified some solutions that I think might be tenable in South Africa.
I think there’s also a good opportunity for the next tax commission, which will hopefully be established in the near future, to be specifically mandated to investigate the gender issues around the tax system because, as you say, Fifi, we need to take a bird’s-eye view approach on this.
I’m not saying that just because you are a woman, you should get a tax break. There should be means tested and [a look at] horizontal and vertical equity in the tax system, so that we can get targeted tax relief where we need it most.
FIFI PETERS: Thanks so much, Dr Steenkamp. I really thought that this was an insightful conversation, an important one economically – and let’s hope the commission does pick up on this and take your investigation further.
Dr Lee-Ann Steenkamp is a senior lecturer for taxation at the Stellenbosch Business School.
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