AAL Insight: End of the tampon tax?

Amid the threat of Eurosceptic backbench rebellion following George Osborne’s budget, the Prime Minister appears to have won a victory by getting Brussels and the other EU leaders to agree to allowing a zero rate of tax on sanitary products in the EU.

A petition of over 300,000 signatures was signed calling for sanitary items to not be regarded as a “luxury product” and for tax to be abolished on them altogether, which the Conservative government promised to fight for.

What seemed a simple issue became a complicated one in the face of the Brexit referendum, with pro-leaving MPs using the issue as leverage to show how Brussels controlled the taxation system in the UK.

Following the agreement, Osborne was quoted as saying: "We said we'd fight for agreement to reduce the VAT rate to zero, and tonight all European leaders have welcomed our plan to do just that. We've achieved what no British government has even tried to achieve. It just shows how Britain can make a case for a reform that will benefit millions as a powerful, confident voice inside a reformed EU."

At the summit in Brussels, the 28 European leaders agreed unanimously on a statement which indicated increased independence and flexibility for member states to set their own rates of VAT, especially with the intention of “zero-rating sanitary products.”

A victory for Cameron?

Downing Street has come out with a statement indicating that it was Cameron who raised the issue of women’s sanitary products with Jean Claude-Juncker, European Council President, at the beginning of the summit.

But he simply cannot claim the whole victory for himself. A variety of member states have been asking for a more flexible VAT system for months, complaining that the current EU VAT legislation is dated, unfair and do not take the particular nuances of individual countries into account.

After the summit, the Commission released a statement saying that it would be publishing its VAT “Action Plan” over the course of the next month, and that it would be allowing two flexible options that would allow individual members their own decisions on taxation of certain products.

A line in that action plan will give a specific mention of a “VAT zero rating for sanitary products”, which is the exact wording that will allow Number 10 to claim a huge victory in Europe, and one that sets the precedent for further UK-led change if we were to stay in Europe.

It appears that what started out as a righteous crusade for equality and fairness in taxation of women’s sanitary products has ended up being just another battlefield over which pro and anti Brexit campaigners can both claim victories. Whether that matters or not, as long as the equality and fairness is gained, is unclear.

All that the original campaigners are likely to care about is that it looks like that their original desire for a zero tax rate on sanitary products is likely to come through with the next set of EU legislation. The wider significance of the debate, in regards to June’s referendum, remains to be seen.