The Economic Aspects of the Pink Tax

Some say- the pink tax is subtle, some say it’s substantial, and a lot of women might consider it illegal. Jennifer Weiss-Wolf, a lawyer, and vice president for the Brennan School of Justice at NYU School of Law says- “I think the motivations around the pink tax come more explicitly from a classic capitalist stance: If you can make money off it, you should.”

The term ‘pink tax’ is often attributed to price-based discrimination, with the name stemming from the prejudice that many of the affected products for women are pink. It is basically the extra amount women are charged on products explicitly marketed toward them by making them more expensive than those for men. In other words, we can also consider it as an influence over women being paid lesser remuneration. In economic terms, “pink tax” refers to firm pricing strategies or government policies that raise transactional costs (usually higher taxes or higher prices) for women. The firms use the selling tactic called price discrimination to maximize their profit.

The idea stems from the fact that our society has high standards of expectations from women when it comes to their appearance and psychological behavior. Since women are taught to behave or make choices in a certain way since their childhood, they tend to spend more on their makeup products, personal hygiene, dressing, or transportation as compared to men. Gender Socialization, as a result of social interactional influences like network and family, leads to the perpetuation of different gender stereotypes which are supported throughout society and ultimately results in gender-based price discrimination known as the pink tax. Other factors like price fixing and product differentiation also foster the prevalence of the pink tax.

Research indicates that only 23% of Indians are aware of the term pink tax and its economic impact. It all started when 12-14% GST was levied on female hygiene products such as sanitary napkins and tampons while male contraceptives were tax-free as they were considered necessary whereas tampons were considered a luxury.  A study by the New York City Department of Consumer Affairs labeled From Cradle to Cane (2015) anticipated that the commodities that perform the same function for both genders cost 7% more than the average for women. Almost 800 products are costlier for females. The general assumption of women being influenced by emotions while purchasing goods and being less price-elastic is extremely stereotyped. Moreover, this entire concept is an indirect emphasis on the demarcation that we make between the two genders. For example, if the cost of sunglasses increases, the male population will avoid buying a new pair of sunglasses and will sustain on the pair they already own, thus having more elasticity towards such products. However, the female population will be compelled to buy a new pair because everyone expects them to be up to date with the latest trends and designs. Henceforth, they will not repeat the pair they already own meaning a lesser elasticity.

Can we rightly call it a hidden discriminatory tax?

As per the Global Gender Gap Report 2022, there is a 19% pay gap between women’s and men’s salaries in India for the same amount of work or responsibility, especially in the agricultural sector where women undertake 80% of the work. The gap extends from the agricultural to the IT sector. This accounts for a gamut of socio-economic reasons. It could possibly imply that a woman is just paid 77 cents to a man’s dollar globally (United Nations Report). This disproportionate distribution of income highlights inequality as an indicator of how women’s work is undermined and unresolved. What could be the possible correlation here?

The pink tax and gender pay gap work both independently as well as in conjunction, rendering women more financially unstable. The pink tax makes women victims of increased expenditure whereas the gender pay gap cuts short their earnings. The two, coupled together, work to make women more economically vulnerable by considerably reducing their purchasing power. Gender discrimination is not merely a social issue, rather it is reflected in every aspect of society, especially the monetary thereby deepening the female economic disparity.

It’s vividly known that the pink tax implicitly gives way to a racist and misogynistic culture. As per the Data from the Bureau of Labor Statistics 2020, the gender pay gap has been worse for women of color, who earned even less compared to white men. Lesser remuneration implies lower disposable income at hand affecting their preferences in the consumer market, especially the ones with lower-wage occupations. Lesser pay and higher costs form a lose-lose situation for females. Unprecedented situations like COVID, the Ukraine-Russia war crisis, and global inflation have only worsened the scenario as governments and firms have found an incentive to raise tax rates to curb deficits. This highlights the actual costs of being a female consumer. The price disparity between males and females is created because of gender socialization which in turn burdens women who are already in a disadvantaged position in society because of the huge wage gap.  Furthermore, specific laws and trade policies associated with imported products are no less to be blamed for the continuing economic strain and disparity among female consumers. 

Research from Mosbacher Institute for Trade, Economics, and Public Policy has stated that differential taxation of apparel based on gender is followed by many countries of the world. For example, tariffs on imported products such as leather shoes and cotton shirts depend on the intended consumer’s gender. The reasons for the persistence of pink tax and tariffs to date are the blatant branding and the marketing ploys of large corporations.

“The pink tax is nothing but a tool to create hierarchies between men and women. This is something that needs immediate attention”

The pink tax is nothing but a tool to create hierarchies between men and women. This is something that needs immediate attention. With all the other battles being fought by women worldwide, this non-evident tax adds to the cost of products for women. Efforts are underway to curb the pink tax. In fact, the United Nations has called on countries worldwide to take steps to eliminate the pink tax to ensure women achieve full and equal participation in the economy using rebates. Advocates have long worked to generate awareness and promote the use of gender-neutral products for bridging the widened gender inequalities. Even social media has brought this unethical tax into the limelight. Several countries—including Australia, Canada, India, and Rwanda—have eliminated taxes on tampons and other feminine products. Gender equality and social justice require society to abolish all taxes on necessities for women’s health. It is only fair that states create laws that are based on equity outside of gender. I strongly believe that one prominent way to expose and eliminate this tax is by developing rationality in our behavior as consumers and for the global female fraternity, it’s noteworthy to not fall prey to the pretty shades of packaging in pink.

Sources

·       Transcript, T. E. (2021, April 22). ECONOMICAL ANALYSIS OF PINK TAX. The Economic Transcript. https://tetofficial.com/economical-analysis-of-pink-tax/

·       What is the “pink tax” and how does it hinder women? (n.d.). World Economic Forum. https://www.weforum.org/agenda/2022/07/what-is-the-pink-tax-and-how-does-it-hinder-women/

·       ‌Julie Menin Commissioner, & Bill De Blasio Mayor. (2015). A Study of Gender Pricing in New York City Consumer Affairs. https://www1.nyc.gov/assets/dca/downloads/pdf/partners/Study-of-Gender-Pricing-in-NYC.pdf

·       Wakeman, J. (2018, August 2). The Real Cost of Pink Tax. Healthline. https://www.healthline.com/health/the-real-cost-of-pink-tax#The-pink-tax

·       ‌Habbal, H. (2020). An Economic Analysis of The Pink Tax An Economic Analysis of The Pink Tax. https://core.ac.uk/download/pdf/322850687.pdf

·       The influence of “the pink tax” is about more than just higher prices. Here’s how it works and how it affects women’s finances. (n.d.). Business Insider. Retrieved September 11, 2022, from https://www.businessinsider.in/personal-finance/news/the-influence-of-the-pink-tax-is-about-more-than-just-higher-prices-heres-how-it-works-and-how-it-affects-womens-finances-/articleshow/90083504.cms

·       ‌Global Gender Gap Report 2022. (n.d.). World Economic Forum. Retrieved September 11, 2022, from https://www.weforum.org/reports/global-gender-gap-report-2022/in-full/1-benchmarking-gender-gaps-2022

·       Lafferty, M. (2019). The Pink Tax: The Persistence of Gender Price Disparity. http://research.monm.edu/mjur/files/2020/02/MJUR-i12-2019-Conference-4-Lafferty.pdf

·       ‌M. Geetha. (n.d.). Ladies, beware the hidden pink tax. @Businessline. https://www.thehindubusinessline.com/catalyst/ladies-beware-of-the-the-hidden-pink-tax/article25393027.ece