Tax policy and gender equality: the impact of the fiscal system on women and men

Madatov Oleg Yakovlevich General adviser, Interregional Public Movement for the Protection of the Rights of Servicemen and Their Families «Conscience of the Law» 350072, Russia, Krasnodar Territory, Krasnodar, Moskovskaya str., 61, sq. 32 oleg_madatov@rambler.ru Other publications by this author

Introduction

Modern tax systems have a significant impact on the economic situation of various social groups, including women and men. Despite the formal gender neutrality of tax legislation, its effects may vary depending on the socio-economic status of taxpayers. Gender differences in income, employment, distribution of family responsibilities and entrepreneurial activity lead to the fact that tax policy often has a disproportionate impact on women and men ^[1].

The relevance of the study is determined by the need to improve the tax system, taking into account gender equality. In the context of global economic and social changes, many countries are reviewing their fiscal mechanisms in an effort to eliminate implicit barriers and create equal conditions for all citizens ^[2]. Gender-based taxation can help reduce the income gap, increase the economic independence of citizens and strengthen social justice.

The purpose of this study is to analyze the impact of tax policy on gender equality, identify key issues related to the differentiated impact of tax instruments on women and men, and develop recommendations for improving the fiscal system taking into account gender factors.

To achieve this goal, it is necessary to solve the following tasks::

1. To study the theoretical foundations of taxation and its impact on the economic situation of various social groups.

2. To analyze the tax burden on women and men, taking into account differences in income, employment and entrepreneurial activity.

3. Consider the impact of family taxation and tax benefits on gender equality.

4. To study the international experience of implementing a gender-oriented tax policy.

5. Develop recommendations for improving the tax system, taking into account the principles of gender equality.

The research uses methods of economic analysis, comparative legal analysis and statistical modeling. Both quantitative and qualitative methods are used, including the analysis of tax statistics, the study of legislative acts, as well as the consideration of cases and practices from different countries.

The main data sources are:

1. National and international tax legislation.

2. Official statistics of government authorities and international organizations (UN, OECD, World Bank, IMF).

3. Scientific publications, analytical reports and research in the field of tax policy and gender equality.

4. Expert opinions and empirical research on the topic.

Thus, the study is aimed at a comprehensive analysis of tax policy through the prism of gender equality and the development of effective mechanisms for its improvement.

Theoretical aspects of taxation and gender equality

Tax policy is a system of government measures aimed at regulating taxation in order to ensure fiscal stability, stimulate economic growth and ensure social justice ^[3]. The main objectives of tax policy are to fill the state budget, redistribute income, create conditions for sustainable economic development and ensure equal opportunities for all citizens.

In modern tax systems, the principle of tax neutrality plays an important role, according to which fiscal mechanisms should ensure equal conditions for all economic entities, regardless of their gender, age, social status or other characteristics ^[4]. However, practice shows that some elements of the tax system can have different effects on different groups of the population.

Thus, such scientists as V. G. Dobrokhleb ^[5], E. A. Baidetskaya ^[6], L. N. Lipatova ^[7], Yu.K. Krasnov ^[8], S. Klasen, M. Santos Silva ^[9], K. Jinyoung, L. Jong-Wha, S. Kwanho ^[10] and others.

According to the scientific opinion of compatriots E. K. Zadorozhnaya and I. S. Naidenko, in economic processes: "gender equality presupposes the existence of equal opportunities for the formation, accumulation, and use of human capital of each individual, regardless of gender" ^{[11, p. 787]}.

The statement by E. K. Zadorozhnaya and I. S. Naidenko about gender equality in the economy, defined as equal opportunities for the formation, accumulation and use of human capital regardless of gender, is a correct but basic idea. It correctly reflects the goal of gender equality, but it simplifies a complex reality. Critically, it does not take into account systemic and historically established barriers, such as gender stereotypes, discrimination in the labor market, unequal distribution of domestic labor, and other factors that hinder the realization of these "equal opportunities." Simply ensuring equal opportunities is not enough, it is necessary to actively eliminate existing inequalities and create a supportive environment, otherwise this statement will remain only declarative.

A slightly different point of view is shared by American representatives of the scientific community R. Kazanjian, L. Kolovich, K. Kochhar, M. Newiak, who believe that gender equality in the economy is understood as a situation where there are no gender gaps in opportunities (for example, in education) and in the labor market. This implies that women have equal access to education, their human capital can be fully developed, and they can contribute to the economy on an equal basis with men, without facing restrictions that lead to inefficient use of resources. In particular, their research highlights that gender inequality, expressed in lower levels of education for girls and a low proportion of women in the labor market, limits economic diversification and slows innovation, reducing overall economic growth. In other words, gender equality in the economy is when gender is not an obstacle to economic activity and the development of human capital ^[12].

At the same time, the study revealed that gender equality in economic aspects is studied exclusively through the prism of ensuring equal rights for women, while men's rights remain ignored.

According to the author, gender equality in the economy implies equal access for men and women (without gender discrimination) to employment opportunities, entrepreneurship, educational resources and other factors affecting economic well-being. In this context, the tax system should help create conditions under which men and women can realize their economic potential on an equal footing, without providing additional preferences to one of the sexes.

From an economic point of view, gender equality contributes to increased employment, increased productivity, and sustained economic growth. Research shows that countries with a high degree of gender equality demonstrate more stable economic development and a lower degree of social inequality.

According to the World Economic Forum (WEF) and the United Nations Development Programme (UNDP), these countries include:

1. Scandinavian countries (Sweden, Norway, Denmark, Finland, Iceland):

- Iceland consistently ranks first in the Global Gender Gap Report (WEF) due to the high level of female participation in the economy and politics ^[13].

- Sweden and Norway offer tax systems that maintain a balance between work and family, including progressive income taxation and child care tax deductions ^[14].

- Finland actively supports women's participation in STEM professions and entrepreneurship, which contributes to GDP growth ^[15].

2. Western Europe (Germany, France, the Netherlands):

- Germany is actively reforming the tax system, introducing incentives for women in the labor market (for example, reducing taxation of secondary income in the family) ^[16].

- France uses flexible tax incentives for families with children, ensuring a high level of employment for women ^[17].

- The Netherlands is implementing a policy of equal opportunities in entrepreneurship, reducing administrative barriers for women businessmen ^[18].

3. Canada and Australia:

- Canada is implementing a gender-sensitive budget policy, analyzing the impact of tax measures on men and women ^[19].

- Australia is actively developing programs to support women in business and the technology sector, including tax incentives for startups.

4. New Zealand: one of the leading countries in terms of gender equality, implementing socially oriented tax reforms to reduce the economic gap ^[20].

5. Ireland: thanks to its gender-neutral tax policy and investments in women's entrepreneurship, it demonstrates high rates of economic growth ^[21].

These countries show that inclusive tax policies, support for work-family balance, and access to opportunities for both sexes contribute not only to social justice, but also to economic growth.

The tax system influences the socio-economic situation of citizens through such mechanisms as tax rates, benefits, deductions, and the specifics of family income taxation. One of the key issues is the ratio of direct and indirect taxes ^[22]: direct taxes (for example, income tax) can take into account income levels and ensure progressive taxation, while indirect taxes (for example, VAT) can have a more significant impact on low-income households, regardless of the gender of taxpayers.

Taxation of family income is also an important aspect. In countries where separate taxation of spouses is applied, conditions are created for the independence of each family member in making economic decisions. Separate taxation of spouses means that each spouse files a tax return separately, and taxes are calculated individually, regardless of the partner's income. This contributes to the financial independence and economic independence of each family member.

Examples of countries with separate taxation of spouses:

1. Sweden. Individual taxation is applied, which stimulates the employment of both spouses. The tax system does not take into account marital status when calculating taxes, which excludes "tax penalties" for working women.

2. Finland. Income tax is calculated separately for each spouse, which contributes to the equal participation of men and women in economic activities. It also provides tax benefits for child care, but without reference to family income.

3. Norway. The main regime is separate taxation, but spouses can choose joint taxation if one of them has a significantly lower income. This system encourages the employment of both spouses and reduces the tax dependence of one partner on the other.

4. Denmark. Taxation is individualized, and spouses pay taxes independently of each other ^[23], which increases women's economic independence and reduces the income gap.

5. Great Britain. There is separate taxation, and each citizen is taxed separately. There is only a small tax benefit ("Marriage Allowance", translated into Russian. "Marriage allowance") for spouses with income differences, but in general the system does not encourage financial dependence of one partner on the other ^[24].

6. Canada. In Canada, spouses are taxed separately, and only in some cases can unused tax credits be transferred between spouses. Such a system promotes equality in the labor market.

7. Australia. The Australian tax system is based on individual taxation, which reduces the incentive for financial dependence of spouses. Tax benefits are more focused on children rather than marital status.

Separate taxation of spouses promotes financial independence, reduces tax barriers for women and encourages their active participation in the economy. This is why countries such as Sweden, Finland, Norway, Denmark, the United Kingdom, Canada, and Australia are examples of successful systems that support equal economic opportunities for men and women.

At the same time, co-taxation can have an impact on the motivation of the secondary breadwinner (usually women) to find employment. Thus, according to a study by V. N. Rudakov, modern society has a gender wage gap: "women with primary vocational education earn 25%, with secondary vocational education – 20%, and with higher education – 18% less than men" ^{[25, p. 189]}.

Joint taxation of spouses (when the tax is calculated on the total family income) can reduce the motivation of the secondary breadwinner to find employment and actively participate in the economy, which is associated with a number of factors:

First, progressive taxation and the "second income tax."

In many countries with progressive taxation scales, when jointly declaring the income of both spouses, the income of both spouses is added up and taxed at a higher rate.:

1. Germany – Ehegattensplitting system (translated into Russian "Separation of spouses"), where the total family income is divided in half, and the same rate is applied to each spouse ^[26]. This reduces taxes for one of the spouses (usually the higher-paid one) and creates an incentive for the non-working partner to stay at home.

2. France – the "quotient familial" system (translated into Russian. "Family coefficient"), where the tax is calculated taking into account all family members, reducing the burden on households with children, but also reducing the incentives for the second breadwinner to work ^[27].

3. The United States – the possibility of joint and separate taxation, however, joint declaration in some cases creates a "marriage penalty" (translated into Russian. "Punishment for marriage") – a situation in which the second working spouse is subject to a higher tax rate ^[28].

4. Spain – co-taxation is available, but it provides tax advantages only if there is a significant difference in the income of the spouses, which may affect the motivation of women to find employment ^[29].

5. Belgium – the total family income is divided, and 30% of the income of the less-earning spouse can be redistributed to the main breadwinner, which also reduces the incentives for the secondary breadwinner to work.

As a result, if one spouse earns significantly more, the income of the second spouse may fall into a higher tax bracket, making his job less profitable, which is especially important for women, whose average income is often lower than that of men.

Secondly, the secondary breadwinner effect. When the income of the second breadwinner (usually a woman) is taxed at a high rate, his net earnings after taxation decrease. Combined with additional expenses (for example, transportation, child care) this makes going to work less attractive. Women are more likely to decide to stay at home or work part-time, which leads to further economic inequality ^[30].

The demonstrated countries are moving towards separate taxation of spouses, in which everyone pays taxes on their income, which in turn eliminates the tax penalty for the second breadwinner, increases incentives for women to work and earn more, and promotes equal distribution of economic opportunities.

Co-taxation, especially on a progressive scale, can reduce the motivation of the second breadwinner to find employment, contributing to the traditional distribution of roles in the family. The introduction of separate taxation or tax incentives that encourage the employment of both spouses can increase women's economic activity and reduce the gender income gap.

In addition, taxation of business activities plays an important role in ensuring equal conditions for men and women. A neutral tax policy should eliminate barriers to business development regardless of the entrepreneur's gender and create conditions for free competition.

Thus, the tax system is an important instrument of economic policy that promotes equal opportunities for all citizens. The issue is not to create additional preferences for one of the groups, but to ensure fair taxation, in which all economic entities receive equal conditions to realize their potential.

Features of the tax burden in the gender context

The issue of the impact of tax policy on men and women remains a key issue in discussions about social and economic justice. Although the fiscal system is formally neutral, its practical impact may vary depending on the income structure, consumption, and work patterns of different social groups.

Direct taxes include income tax and corporate taxation, having a significant impact on the economic situation of men and women ^[31]. In countries with progressive taxation scales, total family income may be taxed at a higher rate, which reduces the incentives for the second breadwinner (usually women) to enter the labor market.

In addition, women are less likely to hold high-paying positions and more likely to work in sectors with lower salaries, which makes them more sensitive to changes in tax policy.

Indirect taxes, such as value added tax (VAT) and excise taxes, affect consumers more, regardless of their income level. However, women, with average lower earnings, spend most of their income on basic necessities, including food, medical and hygiene products. High VAT rates on these goods increase the tax burden on low-income households, in which women are often the main consumers ^{[32, p. 195]}.

Additionally, excise taxes on tobacco products, alcohol, and fuel may have different effects on men and women, depending on their consumer habits ^[33]. Research shows that men are more likely to spend money on excisable goods, while women incur higher costs on goods with high VAT.

Tax benefits and deductions are traditionally focused on supporting families with children, which has an impact on the economic situation of men and women ^[34]. For example, child tax deduction systems or benefit payments through the tax system may encourage one spouse to stay out of the labor market.

At the same time, tax incentive programs for businesses and the self-employed do not always take into account gender specifics, which may limit the economic opportunities of entrepreneurs. In addition, the lack of accounting for the cost of caring for children or elderly relatives in tax deductions may create an additional burden on those performing these functions.

Thus, tax policy has a different impact on men and women, even with formal equality of tax rates. Optimizing the tax system with a gender perspective can help create a more equitable economic environment without giving unreasonable preferences to one gender.

Fiscal policy and the economic situation of women and men

Fiscal policy plays a key role in shaping the economic conditions that affect men and women. The tax system can help achieve gender equality by ensuring fair tax conditions without giving unreasonable preferences to one gender. This section examines the issues of family taxation and its impact on the economic independence of men and women, as well as the gender pay gap and tax policy measures to reduce it.

Family taxation is a system of taxation that takes into account the income of all family members when determining the tax base. In these countries, joint taxation of spouses is applied, which can lead to negative consequences for the economic independence of the secondary breadwinner ^[35]. In particular, the higher tax burden on the second income in the family, which is more often women's income, reduces their incentives to participate in the labor market.

An alternative approach is individual taxation, in which every citizen is taxed regardless of marital status ^[36]. Such a system helps to increase employment among the second breadwinners and reduce their financial dependence on their spouses. The introduction of tax incentives aimed at stimulating labor activity, for example, tax deductions for expenses related to education and child care, can also contribute to the formation of economic independence.

The gender pay gap remains a significant problem in most countries. The difference in income between men and women is often related to different employment sectors, level of education and professional experience, as well as the presence of discriminatory practices ^[37].

Fiscal policy can help reduce the gender pay gap by introducing progressive tax rates, reducing the tax burden for low- and middle-income workers, and tax incentives for companies that ensure equal pay ^[38]. For example, tax incentives can encourage employers to close the gender pay gap and increase transparency in wage determination.

Additionally, tax policy measures may include the provision of tax credits and deductions for individuals working in sectors with traditionally low wages. In the long term, such initiatives contribute not only to raising citizens' incomes, but also to ensuring overall economic growth.

International experience

International experience shows that tax policy can significantly influence the achievement of gender equality. Different tax models are used in different countries, which to varying degrees take into account the peculiarities of the socio-economic status of men and women. International organizations that develop recommendations for improving the effectiveness of tax systems in terms of gender equity play an important role in shaping the strategy of tax policy ^[39].

A number of countries have introduced tax mechanisms aimed at reducing gender disparities. For example, Sweden and Norway have separate taxation of spouses, which stimulates the labor activity of the secondary breadwinner and reduces the economic dependence of one of the spouses.

Canada provides tax breaks for families that ensure a balance between work and family life, but they do not limit the participation of spouses in economic activities.

France uses family taxation based on the number of dependents, which can create both incentives and barriers to employment for citizens, depending on the level of family income.

In Germany, the "splitting" system is used (translated into Russian. "splitting"), in which the total income of the spouses is divided into two and taxed at a lower rate ^[40]. Although this model reduces the tax burden on the household, it can also demotivate the secondary breadwinner to enter the labor market.

International organizations are developing recommendations on tax policy reform in order to ensure equal economic opportunities for men and women. For example, the UN emphasizes the need for a gender audit of the tax system, identifying hidden forms of discrimination and reviewing tax benefits so that they do not create gender imbalances (UN Women: "Gender Equality in the 2030 Agenda for Sustainable Development").

The World Bank recommends reducing the tax burden for low-paid workers, as well as providing tax incentives for employers who hire them in high-paying fields ^[41].

The World Bank's recommendations appear to be an important step towards reducing economic inequality. Reducing the tax burden on low-paid workers can improve the financial situation of citizens and stimulate their participation in the labor market. Tax incentives for employers that encourage hiring in high-paying sectors are potentially an effective tool for overcoming gender segregation in the labor market.

The International Monetary Fund (IMF) focuses on the need to eliminate tax mechanisms that indirectly create obstacles for citizens, including family taxation, which increases the tax burden on the secondary breadwinner.

The IMF's position highlights the importance of identifying and removing hidden barriers in tax systems that may exacerbate gender inequality. Family taxation, especially in the co-taxation format, can reduce the economic motivation of the secondary breadwinner and hinder their financial independence. The removal of these barriers, as the IMF notes, is a prerequisite for creating a fairer and more efficient tax system.

The Organization for Economic Cooperation and Development (OECD) advocates the introduction of progressive tax systems that take into account gender differences in income and expenditure patterns, as well as increasing transparency of tax policy in order to identify hidden forms of gender inequality.

The OECD's proposal to introduce progressive tax systems that take into account gender differences is very reasonable. This involves not only reviewing income tax rates, but also analyzing indirect taxes and tax benefits from a gender perspective. Increasing the transparency of tax policy, in turn, will make it possible to identify and correct hidden forms of discrimination that may not be obvious on a cursory analysis. This is an important step towards creating a truly fair tax system that will not exacerbate existing gender inequality.

To improve the efficiency of the national tax system in terms of gender equality, several areas of reform can be considered.:

1. The introduction of separate taxation of spouses, which will reduce the tax burden on the working spouse and increase their economic independence.

2. Review gender-specific tax benefits and deductions so that they do not create unequal incentives for employment.

3. Conducting a gender audit of the tax system to identify hidden forms of discrimination.

4. The introduction of additional tax incentives for employers to help eliminate the gender pay gap.

Thus, the adaptation of the best international practices in the field of taxation can help strengthen the principles of gender equality in the country's economic system without introducing preferences for one gender at the expense of the other, which will create a fair and efficient tax system that takes into account the interests of all citizens.

Ways to improve tax policy based on the gender factor

Improving gender-sensitive tax policy plays an important role in ensuring equal economic opportunities for men and women. This requires the introduction of reforms aimed at reducing hidden forms of gender imbalance, as well as the development of universal tax programs that do not involve gender preferences. An important area of development is the integration of gender analysis into the budget planning process, which will improve the social justice of the tax system ^[42].

An analysis of global practice shows that the tax system can both promote and hinder the achievement of gender equality. One of the key areas of reform is the transition to separate taxation of spouses, which has already been successfully applied in the Nordic countries such as Sweden and Finland. Such a system reduces the tax burden on working citizens and promotes their economic independence.

Additional measures to reform the tax system may include:

1. Elimination of the secondary effect of taxation for the second breadwinner in the family, which often negatively affects the employment of citizens.

2. The introduction of flexible tax deductions based not on marital status, but on actual economic conditions.

3. Gender audit of the tax system, which allows to identify indirect forms of discrimination.

In order for the tax policy to be fair, support should be based not on gender, but on objective economic and social factors. Possible measures include:

1. Stimulating employment through tax deductions for low-income people, regardless of gender.

2. Support for families with children through tax breaks that apply to all working parents, not just mothers.

3. Benefits for the self-employed and entrepreneurs that take into account not the gender, but the nature of the activity and income level.

Such measures will ensure equal economic opportunities for all citizens by eliminating discriminatory tax mechanisms.

Gender-based budgeting (GOB) is an approach that analyzes the effects of fiscal policy on men and women. The introduction of such a tool will increase the transparency of the tax system and make it more equitable. An example of successful implementation of GOB is the practice of Austria and Australia, where the analysis of tax revenues and government expenditures is carried out taking into account their impact on different social groups ^[43]

The main directions of the development of a gender-oriented budget:

1. The inclusion of gender indicators in tax reporting.

2. Analysis of the distribution of the tax burden between different social groups.

3. Using data on income and expenses of the population to develop a more equitable tax policy.

Thus, the improvement of the tax system taking into account the gender factor is possible through the introduction of separate taxation of spouses, the redistribution of tax benefits and the consideration of gender differences in budget policy, which will create a fair and effective tax system that provides equal opportunities for all citizens without the introduction of preferences for one sex at the expense of the other.

Conclusion

An analysis of the impact of tax policy on gender equality has shown that the fiscal system can both contribute to the achievement of equal economic opportunities for men and women, and create obstacles to their realization. One of the key factors is the taxation structure, which in some countries encourages the economic independence of every citizen, while in others it reinforces traditional roles in the family and in the labor market.

The study showed that joint taxation of spouses in some cases reduces the motivation of the secondary breadwinner (more often women) to participate in the labor market, while individual taxation promotes economic independence and employment growth among women. In addition, indirect taxes, such as VAT and excise taxes, can have different effects on the standard of living of different social groups, which requires that a gender perspective be taken into account when setting them.

International experience shows that gender-sensitive tax policies can be an effective tool in combating economic inequality. Countries with separate taxation of spouses, tax benefits for working parents, and gender-based budgeting demonstrate a higher level of economic activity among women and a decrease in the wage gap.

To improve the tax system, it is necessary to introduce reforms aimed at eliminating hidden forms of gender imbalance, developing universal tax programs without gender preferences, and integrating gender analysis into budget planning. The introduction of tax incentives for companies that support wage equality, tax credits for workers in low-wage sectors, and the development of fiscal policy in the context of a gender-based budget will create a more equitable tax system that provides equal opportunities for all citizens.

Thus, a balanced tax policy based on the principles of equity and equal opportunities can become an important tool in achieving economic sustainability and reducing gender inequality in society.