Basic concepts of macroeconomics: Government taxation and spending

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Annexe I: Basic concepts of macroeconomics

At the national level

Government taxation and spending

Tax systems

‘Tax’ is a form of mandatory fee levied by governments to fund public expenditures. Tax collection is a significant revenue for governments, especially for low and middle-income countries. Tax policies may be used to enhance or redress gender inequalities.

There are different tax systems in the world. A regressive tax system imposes a flat tax, meaning everybody pays the same amount of money. For example, taxes imposed on certain goods and services (consumption taxes) are considered regressive. Regressive taxes do not take into account different income or wealth levels, or the ability to pay. In these circumstances, those who have lower incomes will pay a higher percentage of their income to taxes than those with higher income. This is because the amount of tax paid in the respective currency will be the same for the same good or service. In this sense, a regressive tax system negatively affects low-income citizens.

On the other hand, a progressive tax system imposes different tax rates in accordance with income brackets. In effect, those with higher income levels pay a higher rate of tax. A progressive tax system is crucial for tax justice and gender equality.

Tax systems are not gender neutral. In many contexts within domestic tax policies, women are negatively affected by joint taxation (when they have to file as couples or families) in which they pay higher taxes and lose their independence concerning control of their income and property. Furthermore, women are disproportionately employed in informal, precarious, and unpaid jobs in which they do not have access to work-related benefits (such as health insurance, pensions, or disability benefits).

Tax policies could be designed in a way which would provide access to such services for women. This could be achieved by relying on a progressive tax system where individuals and corporations pay taxes compatible with their income, and exempting individuals with insufficient financial means from all types of taxes.1Lahey, Kathleen. (April 2018). Gender, Taxation and Equality in Developing Countries: Issues and Policy Recommendations. UN Women.

In the context of international tax regulations, large corporations and wealthy individuals often avoid national tax requirements through the use of tax havens, and practices like tax avoidance and tax evasion. These practices are not always illegal (strictly speaking). However, they can result in a significant loss of revenue and drain countries of the resources needed to fulfil their human rights obligations. Thus, it is imperative to reform the tax system on a national and international scale to ensure that tax collection is fair, and it serves the interests of women.2Othim, C., & Saalbrink, R. (1 October 2019). It’s time to tax for gender justice. OpenDemocracy.

For more information on feminist approaches to taxation, see ‘Framing Feminist Taxation’: Making Taxes Work for Women by the Global Alliance for Tax Justice. This publication ‘provides guidance and recommendations for policy-making and advocacy that can influence and change our current economic and tax systems for a feminist future.’


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