Women were shortchanged by the abolition of the “tampon tax” in 2021 as the saving was not passed on in full by retailers in the form of lower prices, according to a report.
Rishi Sunak scrapped the 5% VAT rate on tampons when he was chancellor, and the change took effect from 1 January 2021.
However, Dan Neidle, the founder of the not-for-profit advisory firm Tax Policy Associates, which produced the research, says retailers seem to have kept the money rather than passing it on.
“At most, tampon prices were cut by around 1%” Neidle said, “with the remaining 80% of the benefit retained by retailers. More likely, the retailers took all the benefit, amounting to £10m each year.”
At the time the Treasury said ending the tax would cut each 20-pack of tampons by 7p and each 12-pack of pads by 5p, saving the average woman £40 over her lifetime. However, it was up to retailers to implement the cut and pass the savings on to customers.
Laura Coryton, who started the Stop Taxing Periods campaign that helped bring about the policy change, described the report as “shocking” and said she was considering starting another petition.
Office for National Statistics (ONS) data was used to analyse price changes before and after the “tampon tax” ended. Tampons are in the basket of goods used by the ONS to track the cost of living, but not other period products.
Researchers compared tampon price changes with those of 13 similar products, including tissues and nappies, for several years before the tax was removed and up until March this year, when inflation started to accelerate.
“If the benefit of the VAT abolition was passed on to consumers, we would expect to see a significant divergence between price changes in tampons and price changes in the other products,” Neidle said. “We do not.”
Overall, the average price after the tax was removed was about 1.5% less than it was beforehand, researchers found.
“Our analysis is of ONS data across retailers as a whole,” continued Neidle. “It is therefore possible that some retailers did pass on the benefit of the VAT cut and provided lower prices than the average figure. That would, however, imply that other retailers provided higher prices.”
Coryton said the report showed women had yet to reap the benefits of the tax cut as manufacturers of period products had “consumed the reduction in price”.
“It’s time for retailers to do the right thing, stand by their customers and reduce their prices in line with the axing of tampon tax. The 300,000 people didn’t sign my petition to make retailers richer,” she said.
A government spokesperson said: “We have kept our promise to scrap the tampon tax to make sanitary products more affordable, and urge retailers to pass the savings on to shoppers.”
The runaway rate of inflation makes comparisons with today’s prices difficult. A snapshot of supermarket pricing shows a 14-pack of Always Sensitive pads still costs 95p, the same as in 2020, based on the average price across Tesco, Sainsbury’s, Asda and Morrisons, according to the data firm Assosia.
Two years ago a pack of 20 supermarket own-label tampons cost 93p, and the price was the same in November last year, but today they cost 3p more. On the same basis, a 14-pack of own-label ultra regular pads cost 65p in 2020, rose 2p to 67p in 2021 and now cost 70p.
Meanwhile, at £2 a pack of 18, Tampax Compak super plus tampons are 15p or 7% cheaper today than two years ago.
Tesco, the UK’s biggest retailer, said it had pre-empted the tax change by cutting the price of its sanitary products in 2017 and pointed to own-brand period products starting at 40p for a 10-pack of sanitary towels.
“Tesco was the first retailer to cover the VAT on sanitary products back in 2017,” a spokesperson said. “When we made this decision, we immediately reduced the price of these products by 5% to ensure our customers could benefit.”
Boots also said its shoppers had benefited from the scrapping of the tax. “In January 2021, we reduced the price of our period products by 5% to reflect VAT changes for this category, passing the saving on to customers,” it said.