On 3 October 2018, the Commonwealth, state and territory treasurers unanimously agreed to remove the Goods and Services Tax (GST) from ‘feminine hygiene products’ from 1 January 2019. GST has been applied to these products since its introduction in 2000. In recent years there has been considerable pressure to remove it.
Under subdivision 38-B of the A New Tax System (Good and Services Tax) Act 1999 (GST Act), certain listed supplies of health related goods and services in Australia are GST-free. In addition to those supplies specified in the GST Act, the Health Minister may determine that the supply of other health goods is GST-free under section 38-47.
Treasury released a consultation paper on 8 October 2018 on the proposed definition of feminine hygiene products to be made GST-free, which would cover both disposable and reusable feminine hygiene products. Consultation for the draft definition of feminine hygiene products closed on 22 October 2018.
Following consultation, the Minister for Health issued the A New Tax System (Goods and Services Tax) (GST–free Health Goods) Determination 2018 on 26 November 2018. This determination makes the following goods GST–free as of 1 January 2019, under section 38-47 of the GST Act:
maternity pads, menstrual cups, menstrual pads and liners, menstrual underwear, tampons, and other similar products specifically designed to absorb or collect lochia, menses or vaginal discharge
According to the Explanatory Statement, the Determination does not cover products such as feminine washes, feminine deodorants, intimate wipes, and supplements or vitamins marketed for use during menstruation.
According to 2017–18 Final Budget Outcome total GST revenue amounted to $65 billion in 2017–18. It was reported in June 2015 that a Parliamentary Budget Office costing had found the exemption for feminine hygiene products would reduce revenue by $35 million in 2017–18 and by $480 million over a decade.
History of the ‘tampon tax’
The GST was introduced on 1 July 2000 under the GST Act. GST is generally levied at a rate of 10 per cent on the supply of goods and services unless the supply is made GST-free or otherwise exempted. In accordance with clause A14 of Schedule A to the Intergovernmental Agreement on Federal Financial Relations, unanimous agreement of the state and territory governments is required to vary the GST base.
In June 2000, the then Minister for Health, Dr Michael Wooldridge, issued the first determination making various health goods GST-free under section 38-47 of the GST Act with agreement from state and territory treasurers. This included condoms, barrier dams, lubricant, folic acid and certain sunscreens.
Following public concerns that feminine hygiene products were not made GST-free, Dr Wooldridge stated in an interview that ‘[a]s a bloke, I'd like shaving cream exempt, but I'm not expecting it to be’. When questioned on why condoms were GST-free, Dr Wooldridge added ‘condoms prevent illness. I wasn't aware that menstruation was an illness’.
Currently, the GST-free Supply (Health Goods) Determination 2011 continues to make the above listed supplies of goods GST-free, in addition to nicotine for use as an aid to stop smoking which was made GST-free in 2004.
The decision to not make feminine hygiene products GST-free (also known colloquially as the ‘tampon tax’) has attracted considerable criticism. Since 1999, many campaigns have been run to make feminine hygiene products GST-free, with two online petitions—‘Axe The Tampon Tax’ and ‘Stop taxing my period!’—garnering around 180,000 signatures between them.
While the announcement in October that feminine hygiene products would be made GST-free was met with considerable support, some commentators have expressed concern that such exemptions undermine the GST as an important source of Australia’s revenue. Miranda Stewart, professor at the University of Melbourne and fellow of the Tax and Transfer Policy Institute at the Australian National University, stated that:
We can and should take women’s public health needs and poverty seriously. We should also take the unequal and gendered effect of Australia’s current tax and welfare system seriously. I call on our state, territory and federal treasurers to demonstrate proper stewardship of our second most important tax base. That means protecting a broad tax base, removing exemptions and raising the rate. The funds raised should be spent on public health, social security and education.
In recent years there have been numerous proposals to remove the GST on feminine hygiene products.
In August 2015, the Coalition Government wrote to the state treasurers proposing the removal of GST on feminine hygiene products. However, this proposal did not receive unanimous agreement from the states and territories. At the time it was reported that all Australian Labor Partly (ALP) treasurers supported the exemption, while the Liberal Party treasurers did not.
Senator Janet Rice of the Australian Greens (the Greens) introduced the Treasury Laws Amendment (Axe the Tampon Tax) Bill 2018 in May 2018. The Bill, which passed the Senate on 18 June 2018, proposes to define ‘sanitary products’ in the GST Act and make a supply of such products GST-free by inserting proposed section 38-65 into subdivision 38-B.
Prior to this, in June 2017, Senator Larissa Waters of the Greens moved an amendment to the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 which would have made sanitary products GST-free, in the same way as Senator Rice’s Bill (although the proposed amendment contained a slightly different definition of ‘sanitary products’). The amendment was not agreed to.
The ALP announced in April 2018, that a Shorten Government would remove the GST from women’s sanitary items. The ALP proposed offsetting the revenue loss by applying GST to 12 natural therapies.
During Senate Estimates hearings in February 2018, Senator David Leyonhjelm explored the option of making sanitary products GST-free by way of a determination made under section 38-47 of the GST Act. Senator Leyonhjelm also questioned the Treasury as to whether it is ‘within the power of the ATO [Australian Taxation Office] or the Minister to reclassify menstruation as a disability’, on the assumption that feminine hygiene products would then be GST-free under section 38-45 of the GST Act. Treasury’s response confirmed that such products could be made GST-free by way of a determination made under section 38-47, but it did not address the issue of classifying menstruation as a disability.
*Co-authored with Joseph Ayoub