Germany's feminine hygiene product tax cut offset by price increases

In 2020, Germany reduced the VAT on sanitary pads and tampons from 19 to 7 per cent, a move that was widely celebrated as a victory for gender equality. According to Pascal Zamorski from the ifo Institute, “The VAT reduction on sanitary pads and tampons was passed on 100 per cent to female consumers. That is rare. Public pressure from petitions and intensive media coverage may have contributed to it.”

However, the study also found that companies offering tampons and pads simultaneously raised prices for panty liners, which were not included in the VAT reduction. “Away from the public eye, companies have profited from a political measure that should have relieved the burden on female consumers,” Zamorski added. The increase in panty liner prices has partially offset the financial relief intended for women, with around one-third of women who regularly buy pads and tampons also using panty liners. This group has consequently lost part of the tax break, ifo said in a press release.

“Women who mainly buy panty liners were even burdened by the VAT reform,” said Florian Neumeier, co-author of the study from the ifo Institute. The findings highlight the complexities of tax policy and its unintended consequences. Neumeier emphasised, “Tax measures must take account of both the direct effects on the target products and the indirect effects on related goods. That is the only way to avoid unintended consequences and market distortions.”

Fibre2Fashion News Desk (KD)