Ahead of the UK Autumn budget statement (29th October 2018) the UK Women’s Budget Group (WBG) provided an important analysis of why austerity isn’t over, especially for women living in the UK. It is a useful point to reflect on the role of tax and its gendered implications.
As the WBG explains, the importance of revenue raising and the distributional impact of taxation is:
“the necessary financial contribution that individuals and companies make to having a well-functioning society. In general, everyone gains from public spending, and one way to finance that spending is by raising revenue from taxation. Women, being more likely to take up caring roles, have on average lower incomes than men and are particularly helped by state spending both on social security payments and on public services. Men, having higher incomes, make a larger tax contribution through taxation, so benefit more from tax cuts.
The WBG estimate that the revenue take from taxation in the budget announced this week could have been significantly more had there not been ‘giveaways’, specifically, tax cuts on Corporation Tax, fuel and alcohol duties. They estimate that by 2021-22, annual tax revenue could be £47 billion higher.
Chancellor Hammond, seemed then, to revert to the same ‘we’re all in it together’ rhetoric and approach of previous budgets.
As we have previously blogged (see also Tax Us If You Can ) the Women’s Budget Group point out that regressive tax policy measures and the erosion of social protections such as the freezing of the Universal Credit programme:
“Have deleterious effects for women and, being hard to reverse, these effects can be long-term” [our emphasis].
But these long-term effects can be mitigated in different ways by taxation and not just through revenue raising. Governments can provide administrative functions, core public services and social protections from tax revenues, but can also ‘redistribute’ through tax to mitigate against inequalities in income and wealth.
Taxation also plays a role by helping to build and sustain ‘the social contract between citizens and the state’. This contract is especially important for women, who often find themselves disenfranchised as a result of lower incomes, their role as unpaid carers, and as a result of their systemic economic dependence on others. Paying a fair share of tax creates an ‘expectation’ to which Governments can be accountable. Alex Cobham, TJN puts it like this:
“The share of tax revenues (and direct taxes most of all) in government expenditure is one of the few indicators consistently associated with improvements in governance. When states increase their reliance on progressively taxing citizens, the prospects are not only of more revenue but –crucially– that the revenues will be better spent, reflecting social preferences through enhanced political representation”.
Next week Philip Alston, UN Special Rapporteur on Extreme Poverty, visits the UK to assess the impact of austerity policies. He will witness and hear about the disproportionate impact austerity has had upon women and those for whom they care. He will hopefully note too that the effect of austerity on the UK’s poorest citizens is both systemic and entrenched, and that it is tantamount to a dereliction of state duty to allow opportunities to slip by – as per the Autumn Budget statement – and not to utilise taxation with all its features as an instrument for progressive change.