Womenlink Korea has taken issue with the value-added tax (VAT) levied on disposable sanitary napkins (menstrual pads). It organized a seminar on August 20 on the theme 'The Problem of Levying VAT on Sanitary Napkins" to discuss concrete ways to make sanitary napkins tax-free.
VAT, which is levied on manufactured goods on the premise that added value is generated at each stage of production, stands at a flat rate of 10% in Korea. Womenlink, however, demanded that sanitary napkins be given VAT exemption in the name of maternity protection, reasoning that the product is a necessity for social reproduction. Furthermore, the scope of VAT exemption has steadily expanded to reflect social changes since the VAT system was introduced in 1976. In light of this fact, Womenlink argued, sanitary napkins should also be a VAT-exempted product, since they are basic necessities. Moreover, applying VAT on a product used by almost all women in their reproductive years poses the problem of inequity in income distribution.
According to tax accountant Hong Seong Guk, who participated in the seminar, Korea has an abnormal taxation structure where 51% of tax revenue comes from indirect tax. Thus, Hong argues that questioning the VAT levied on sanitary napkins merits attention as part of the overall efforts to expand direct taxes in order to reduce the rate of indirect taxation and enhance the equity of the tax system.
In fact, according to a survey conducted by Womenlink from April 23 to May 15, 90.3% or 645 of the 717 women surveyed agreed that sanitary napkins were expensive, and 60.8% of them said they spent more than 5,000 Won (a little over US$4) a month on sanitary napkins. 661 or 92.6% of the respondents were for the exemption of VAT on disposable sanitary napkins.
During the seminar, participants revealed a variety of opinions ranging from VAT exemption to full tax exemption. Hong explained that if VAT is exempted only for end users, the price of sanitary napkins sold at 4,400 won a pack would only go down by 100 Won, whereas applying the zero tax rate would eliminate tax payments on added value created throughout the production process, significantly lowering the sales price. Therefore, the accountant reasoned that the zero tax rate would be a more effective means of achieving equity.
In the case of other countries, American states such as New Jersey, Minnesota and Maine do not levy tax on sanitary napkins, and Illinois applies a reduced tax rate. Sanitary napkins are also tax-free in Manitoba and Ontario in Canada as well as Ireland and Australia.
Womenlink Korea plans to launch a street campaign and signature-collecting drive from August 23 to raise social awareness about this issue.