Reforming Tax Policies to Protect Women – AASU’s Kodjie

Business news for Saturday, December 19, 2020

Source: Daily mail

2020-12-19

The Secretary General of the All Africa Students’ Union, Peter Kwasi Kodjie, has tasked African governments with formulating progressive policies aimed at reducing the tax burden on women.

In an article for NORRAG Special Issue 5 titled “Understanding the Gender Dimension of Taxes and Education,” Kodjie stated that, although the provision of public infrastructure and social services by governments is a key factor for the socio-economic development, tax systems must reflect the unequal burdens between men and women.

Expressing concern about the inequity of VAT laws in Africa, he said: “VAT is often regressive because it is applied equally to everyone, regardless of income. Women tend to earn less than men, so a tax that treats everyone equally will mean that women are paying more as part of their income than men. Furthermore, because women tend to spend more than men on basic necessities such as food, clothing, school supplies and medicines, women can be actively disadvantaged by the widespread use of VAT ”.

According to the Secretary-General, if policies are gender-neutral, they will help achieve equitable national development.

He indicated that the tax systems of developing countries are made up of different categories of taxes. In Ghana, for example, the tax system is made up of three main categories that include direct taxes such as income taxes (personal and corporate), business taxes (import and export duties) and indirect taxes (value added tax, national rate health insurance, Ghana Education Trust Fund Raising); they are rarely examined through the lens of gender.

In the article, Kodjie lamented how women are often doubly disadvantaged when it comes to how taxes are increased and how they are spent.

In terms of direct taxes, the Secretary General of AASU stated that the personal income tax is an important source of income in richer countries, but less so in developing countries, therefore, direct taxes should phased in so high-income people pay a higher rate and lower income are exempt.

She stressed that “this may be progressive and gender-fair, but most of the personal income tax systems in Africa are very flat, in part because those with higher incomes tend to have a voice. higher in making decisions that affect fiscal policies ”.

Kodjie made references to ActionAid, a global federation working for a world free of poverty and injustice, and to the International Labor Organization to reinforce his claims. According to ActionAid, if the focus of increasing income moves towards introducing a progressive income tax, with those who earn more paying more, that would be much fairer for women, as men would pay more, which is not the norm in most current tax systems.

A 2015 report from the International Labor Organization (ILO) also details that tax relief policies are often embedded in personal income taxes, further benefiting men who focus on employment. formal.

“There are similar challenges with other forms of direct taxes, such as taxes on corporate income. When women are business owners, they tend to focus on small and micro businesses: only 5 percent or fewer of the chief executives (CEOs) of the largest global corporations are women, yet tax systems often target small business owners more than large corporations, “the report said.

The report indicated that informal employment is a more important source of employment for women than for men.

It went on to state that of the total population of employed women in sub-Saharan Africa, 84% are informally employed and the remaining 16% work in the formal sector, compared to 63% of men in the informal sector and 27% of men. in the formal sector.

While women tend to focus on street vending, home work, and as industrial subcontractors, which is part of informal sector jobs, these could be thought of as tax-exempt jobs as they will not pay formal commercial fees no income taxes.

However, recent research suggests that informal workers and businesses are often taxed quite heavily through numerous types of fees, charges and licensing costs, which can be applied locally, nationally, or both, and to merchants The informal market is often charged multiple times, either formally or informally according to an ActionAid report.

The Secretary-General indicated that in Ghana, 80% of women work in the informal sector, compared with 50% of men. A 2011 study found that 95% of women informal traders paid some type of tax, either national or local, including market rates. Half of these women paid both national and local taxes, and those who earned relatively less paid a higher proportion of taxes.

Therefore, Kodjie calls on stakeholders to put measures in place to address these gaps and alleviate the plight of women who play a crucial role in the socio-economic development of societies.