London, Rishi Sunak, the UK’s new Indian-origin Chancellor, is set to abolish the unpopular ‘tampon tax’ levied with VAT on sanitary products in his first Budget since he assumed office last month, a media report said.
A European Union (EU) law has so far prevented member states from reducing the rate below 5 per cent, which means sanitary products were being treated as luxury items and not essentials, said the Daily Mail report on Friday
The UK government has planned to introduce the zero rate on January 1, 2021, the first day EU laws no longer apply to the UK.
The Treasury had estimated that the move will save the average woman nearly 40 pounds ($52) over her lifetime, with a cut of 7p on a pack of 20 tampons and 5p on 12 pads.
Critics have long slammed the tax for contributing to ‘period poverty’, where sanitary products were pushed out of reach because of their cost. Tampons and towels have been subject to five different tax rates since 1973.
The UK first introduced VAT in 1973, with a standard rate of 10 per cent applied to sanitary products.
In 1974, standard VAT was cut to 8 per cent, before rising to 15 per cent in 1979 and 17.5 per cent in 1991, the Daily Mail report said.
In January 2001, the UK government moved sanitary products to a reduced rate of 5 per cent following a campaign and debates in Parliament.
Since 2015, revenues raised from VAT charges on tampons and pads have been used to fund charities that aid vulnerable women.
More than 62 million pounds has been allocated since the scheme was launched.
Sunak, who became Chancellor on February 12 following the resignation of Sajid Javid, was also expected to use his first Budget to announce support for families, businesses and public services in the fight against the spread of coronavirus.
He is also expected to boost pensions tax relief for high earners in a bid to persuade NHS doctors not to reduce their hours.
The budget is expected to be unveiled on March 11.
