By Betty Guchu
There is evidence to show that the existing tax regime in Kenya is unfair and unjust to women because of how it is structured and the fact that it fails to acknowledge and address their different circumstances. As a group, women often have multiple identities that have varying implications for their ability to pay taxes, especially given the disproportionate share of unpaid care work they carry.
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Gender tax inequality manifests itself in the disparities related to labour productivity and the economy’s allocative efficiency. Where it exists, it results in diminished opportunities for certain groups within the society, affecting compensation for labour, access to capital, control over other productive resources, as well as the capacity to impact and participate in development processes.
There is evidence to show that the existing tax regime in Kenya is unfair and unjust to women because of the manner in which it is structured and the fact that it fails to acknowledge and address their different circumstances. As a group, women often have multiple identities that have varying implications on their ability to pay taxes, especially given the disproportionate share of unpaid care work that they carry. Gender responsive taxation is, therefore, essential because it recognises the distinctions between men and women.
In effect, the combination of taxes imposed by a nation – and the specific consequences of those taxes – can have a profound influence on women’s rights and gender equality. Whereas in high-income countries indirect taxes make up only one third of total tax revenues, in low-income nations, indirect taxes like trade taxes and value-added tax (VAT) account for approximately two thirds of tax collections.
This reliance on indirect taxes can have major implications for women. Indirect taxes typically take the form of consumption taxes such as VAT, which is regressive when implemented without exemptions since everyone pays the same rate regardless of their total income – and the poor, by necessity, spend a larger percentage of their income on consumable products. While it is very difficult to determine the effects of VAT and the overall tax burden on women separately from men, it is widely believed that women are disproportionately burdened by VAT because they make up the majority of the poor and are more likely to spend their income on the daily necessities for the household, including for children.
According to the 2022 Demographic and Health Survey conducted by the Kenya National Bureau of Statistics (KNBS), 36 per cent of households in the rural areas and 33 per cent nationally are headed by women who spend most of their income on food and other basic necessities and services. From this we can deduce that the burden of VAT is generally higher for women since most of their income is spent on those goods and services to which VAT is applicable. A Route to Food report finds that the VAT Act 2013 had a devastating effect on the purchasing power of households, significantly reducing their capacity to afford food and meet their nutritional needs.
The doubling of VAT on petroleum products from 8 to 16 per cent under the Finance Act 2023 will have placed an even greater burden on women by further driving up the cost of essential commodities.
The doubling of VAT on petroleum products from 8 to 16 per cent under the Finance Act 2023 will have placed an even greater burden on women by further driving up the cost of essential commodities.
As the cost of doing business goes up, squeezing already meagre profit margins, this increase is being felt by the marginal small and micro-enterprises, which re mostly informal businesses in where women mainly engage.
The increase will also be felt most by the marginal small and micro-enterprises, the mostly informal businesses in which women mainly engage, as the cost of doing business goes up, squeezing already meagre profit margins.
As such, while indirect taxes such as VAT target and affect the whole population, they do not consider the implications for women – especially those in single-parent households – and their ability to produce and increase their incomes.
Hidden time tax
Taxes are based on income. However, there are other sources of income that might not come from employment, such as domestic production, yet most countries do not include non-market production in the income that is subject to tax. Women perform 75 per cent of the unpaid care work worldwide, including cooking, cleaning, tending to children, the sick, and the old, as well as helping other families and the society at large. Other unpaid jobs include working in a family business, making clothes and other items for use by the household, and engaging in subsistence farming.
Although it is not remunerated, this work enables society and the market to function, and the economy to thrive. And while it has not been effectively measured, it is estimated that care labour could be contributing between 10 and 50 per cent of GDP if assigned a monetary value. Yet women’s care work remains unrecognised in Kenya’s national accounts and is not considered in the country’s fiscal policy. In essence, providing unpaid care work results in the systematic transfer of unacknowledged hidden subsidies to the economy and imposes a time tax on women.
In addition, women who provide unpaid care are less able to pursue paid employment, engage in public or community life, or even just take time out for leisure and relaxation; according to research by Action Aid, the average woman works four additional years over her lifetime compared to her male counterpart.
Moreover, in most developing countries, the demands of women’s unpaid care work often mean that the kind of work they can fit around their caregiving responsibilities is frequently informal, precarious, low-paid, and conducted in poor conditions. They are routinely paid less than men for work of equivalent worth.
In most developing countries, the demands of women’s unpaid care work often mean that the kind of work they can fit around their caregiving responsibilities is frequently informal, precarious, low-paid, and conducted in poor conditions.
Intersectional gender inequality
It is to be noted, however, that even among women, there are marked inequalities that mean that for some, tax injustices are more pronounced and more profoundly unfair than for others. This is especially the case for women who live in the marginalised areas of Kenya that have suffered historical government neglect and where the provision of basic public services has been limited.
In effect, there is evidence of marked inequalities in the distribution and access to basic services and public goods between many of the counties considered marginalised in Kenya and the rest of the country. As such, women bear an even greater burden in areas where health facilities are poorly staffed or inadequately equipped, where water services are inadequate and access to education is limited. The net effect is that they are given even less opportunity and allowed even less time – compared to men – to pursue productive activities outside the household that could improve their incomes and livelihoods.
Therefore, while gender discrimination affects all women in some capacity, there are additional factors related to their social identities – such as class, ethnicity, religion, or region of origin – that contribute to the existence of significant differences in the ways that women from different groups experience discrimination. Such factors essentially show up in the form of problems and vulnerabilities that are specific to certain groups of women or that disproportionately impact some women compared to others.
However, interventions designed to address gender discrimination have proven not to effectively consider the plight of women subjected to multiple forms of discrimination. They have failed to address the ways in which patriarchy, economic disadvantages and other forms of discrimination contribute to creating layers of inequality that structure the relative positions of men and women, ethnic communities and other groups, and determine the distribution of resources and opportunities to one group rather than to another.
While notable progress has been made in terms of their status and their rights, women in Kenya continue to lag behind men. It is therefore critical to work towards solving this problem by developing tax, budgeting and public finance policies that acknowledge the fundamental distinctions that exist between men and women that render the latter vulnerable to tax injustices. Gender-responsive taxation is essential because it not only acknowledges these distinctions but also allows for the assessment of an existing tax regime in order to address the gaps that contribute to the overburdening of certain groups.
To promote tax equity for women will require addressing the drivers of tax injustice. These include the absence of women in the processes that determine the mobilisation, distribution and accountability for domestic resources (largely taxes); the burden of unpaid care work and its implications regarding taxation for women; gender differences regarding consumption patterns and property rights; and the inadequate and inequitable distribution of public goods and services, in particular those that have a direct impact on the circumstances of women.
Ensuring a fair and progressive tax system that facilitates the equitable redistribution of public resources and public goods and services, and that reduces inequality and promotes inclusive development will require collaboration between the civil society, government, academia and the private sector. It will also necessitate policy reforms and institutional changes as well as capacity building and education regarding the implications of the gender roles of women, and government policies and laws, on the fairness of the tax regime on women.
Ensuring a fair and progressive tax system that facilitates the equitable redistribution of public resources and public goods and services, and that reduces inequality and promotes inclusive development will require collaboration between the civil society, government, academia and the private sector.
Without a careful review of the design of tax instruments, it is likely that they will continue to disproportionately hurt women as they are more vulnerable to poverty, to inequality, and to internal and external economic shocks.
