Why Tanzania’s VAT Exemption on Sanitary products has been ineffective

In order to ensure that women, especially schoolgirls, have access to affordable sanitary products, the Tanzanian government placed a tax exemption on sanitary pads. Barely nine months after the exception tool effect on July 1, 2018, the government is reconsidering its stance.

The country which followed in the footsteps of South Africa, Botswana and Kenya took the same measures (VAT exemption) its counterparts took, but so far, it has proven to be counter-effective for those who are most affected; females in poor, rural communities.

According to the country’s Finance and Planning deputy minister, Ashatu Kijaji, it was established that the exemption of VAT was only benefiting traders and not women. “I admit that there are reported complaints that women still feel the pinch of the item’s high price. We are thinking of the best measures that will have a positive impact on both women and government,” said Kijaji.

This high cost of sanitary pads is usually a result of the pink tax, a phenomenon often attributed as a form of gender-based price discrimination, where products marketed specifically for women are generally more expensive than similar items marketed at men.

Thirty percent of Africa’s population (357 million people) are girls and women aged 10 to 50 years. The average woman has her period for 2,535 days of her life, that is nearly seven years out of 39 years (5 days per 28-day cycle) of buying sanitary pads.

Based on the average of 38 years of menstruation in a woman’s lifetime, she uses more than 11,000 disposable sanitary products or 22 of these items per cycle on a 13-cycle per year. Meaning that on the average, a lady would use 289 pads yearly.

Like in other African countries, sanitary products in Tanzania are still highly priced despite the tax relief granted, mainly because the cost of production has remained unchanged and even though manufacturers no longer pay VAT, they still have not reduced the price and there are no stringent measures ensuring they do so.

When it comes to sanitary products, both manufacturers and distributors make direct sales to retailers or other distributors; each coming at a cost. If a manufacturer sells its sanitary towels for SH1,900 to distributors who, in turn, resell at SH1,950 to the retailer’s, the end consumer (women) bear the brunt of this logistics cost and mark-ups, tax exemptions or not.

A lower tax rate or a complete tax relief on a product does not always translate to a reduction in the end price to the consumer. Things like polythene film, release paper, wood pulp, cotton and the glue used in the manufacturing of sanitary napkins attract a good and service tax rate as high as of 18 percent and the manufacturers of sanitary towels still pay taxes in addition to the costs of exporting their products.

It is estimated that one in ten African adolescent girls miss school while menstruating and many eventually drop out because they cannot afford sanitary products. If the Tanzanian government truly wants to keep its girls in school and ensure they have access to menstrual products, it should start thinking of low-cost local production methods for sanitary towels as these would reduce import cost and keep the process in hands of the government.