A new report from Stellenbosch Business School highlights the disproportionate impact of VAT and income tax on women in South Africa, reports Ellen Buchan
VAT and income tax have a disproportionate impact on women, especially single mothers. This was the conclusion reached by Lee-Ann Steenkamp, head of the Postgraduate Diploma in Financial Planning at Stellenbosch Business School and contributor to the 2022 Women’s Report. The report was released by the SA Board for People Practices (SABPP) in partnership with Stellenbosch Business School.
During the apartheid years in South Africa, women suffered discriminatory tax systems that especially disadvantaged working married women. When this was repealed after 1994, the law changed and both men and women were taxed the same, regardless of marital status. Now, single-earning households only benefit from one tax rebate, meaning they are disadvantaged by tax. This disproportionately impacts women, as the report found that more than 40% of South African households are headed by sole female breadwinners and that 41.7% of children live with single mothers; only 4.4% live with single fathers.
The report also found that while women make up nearly half of taxpayers (46%), they only contribute one third of the total tax paid, signifying that they are concentrated in the lower tax brackets.
Despite this, women were found to be left with higher costs; as primary caregivers they spend more on the collective household needs such as food, health and education, and therefore pay more VAT in general on these items. To allow for a more equal distribution of wealth, Steenkamp proposed that higher tax thresholds for women, tax breaks for female-owned businesses, reduced tax rates on property owned by women and tax deductions for childcare costs should be introduced.
She also suggested that wider access to free or affordable healthcare, education, water and social protection would free up women’s income.
This article is adapted from one which originally appeared in the October 2022 issue of Ambition – the magazine of the Association of MBAs.
