The “Pink-Tax” Phenomenon in India: Economic Implications and Accountability

– Anushree Prasad

Introduction 

The term “Pink Tax” denotes a range of gender-based economic or fiscal inequalities in academic discourse. While this phenomenon has been in practice for several years, the term was first coined in 1994 in California, marking the realisation of gendered pricing disparities.  The discussions surrounding the “Pink Tax” phenomenon operate within a male-female binary despite the broader and inclusive contemporary understanding of sex and gender expression. The “Pink Tax” is not a formal  tax levied by the Government but rather  a capitalist tool to bolster private profit rather than serve the collective interest. Despite its prevalence across sectors, this phenomenon remains under-researched and under-studied. Through this piece, the author  analyses the concept of “Pink-Tax” and how it operates as a regressive consumption burden, as well as its legal-economic implications in India. Lastly, the author suggests reforms to mitigate this discriminatory phenomenon by comparing global statutory and other frameworks aimed at combating the issue of pink-tax.

Is the Pink Tax Real?

The term ‘tax’ is understood in two ways. Firstly, its literal meaning implies the compulsory contribution enforced on an individual by the state and constitutes one of the most significant resources for the government. Secondly, in the figurative sense, it is understood to be an oppressive or burdensome charge of an obligatory nature.

Pink Tax  encompasses the following phenomena and is used in a multitude of ways:

1. gender wage gap; 
2. price differentials in goods or services based on gender;
3. additional costs incurred to secure transportation due to gender-related personal safety concerns;
4. taxes on menstrual products; 
5. expenditure on beauty and grooming products to cater to the conventional gender norms; and
6. disproportionate time burdens borne by women to carry out household chores and caretaker duties.

Pink Tax is figured as both connotations of tax. While the Equal Remuneration Act was enacted back in 1976, studies show that Indian women were earning 28% less than their male counterparts in 2018-19, which increased by 7% between 2020-21 due to the pandemic. 

An extension of gender socialisation, gender-based price inequalities impact various groups of people in varying degrees since it appears across varying goods and service industries, for instance, personal care items, clothing, accessories, toys and services such as insurance, dry cleaning and hairdressing. Contrary to the popular understanding that financial services are gender-neutral.

While research and data collection in Indian markets on Pink Tax remain limited, we may take a look beyond the borders. In 2015, the New York City Department of Consumer and Worker Protection (DCWP) conducted a first-of-its-kind study to identify gender-based price differentiation for various goods in the city of New York across multiple industries, namely, toys and accessories, adult and children’s clothing, personal care items such razors and deodorants, and senior/home health care products. The DCWP compared around 800 products with distinct male and female versions from over 90 brands sold across two dozen New York City retailers, both online and in physical stores. The study captures the regular consumer lifestyle, spanning from products for children to senior citizens, thus providing insights into the consumer experience across age groups.

The DCWP’s findings exposed that across the five industries, products that are marketed towards women cost 7% more when compared to men’s products, with women paying 13% more for personal care products. Women face a greater financial burden than men in purchasing basic, routine products. Further compounding this issue is the fact that across all geographic regions, women are paid less than men, with the global gender pay gap estimated to be around 20%. 

Tax Implications

Pink Tax can be classified as a selective – regressive – consumption tax. A consumption tax is levied when the consumer purchases a good or service and is paid either directly or indirectly. It is applied to the amount of money spent by individuals on consumption rather than income or savings. It is also referred to as an expenditure tax or cash-flow tax. The concept rests on the argument that people should be taxed for taking away from the collective pool of goods.  A regressive tax, on the other hand, takes away a larger portion of income from the lower-income groups as compared to the higher-income groups.  Therefore, there exists an inverse relationship between the taxable income and the tax rate. 

The Pink Tax, in its conventional understanding, is applies to consumer goods and targets specific  products and services. As highlighted in the preceding section, females as a group remain significantly underpaid when compared to their male counterparts. Thus, the Pink Tax functions as a regressive – consumption tax that disproportionately burdens women, essentially exacerbating the existing gender pay disparities. The UN Committee on Economic, Social and Cultural Rights highlights that low-income individuals bear the brunt of regressive taxation policies, and women are disproportionately burdened by this, especially those engaged in the informal sector. While corporate houses enjoy state subsidies and tax rebates, informal workers fall outside the coverage of the social security net, which is financed by their indirect tax contributions to some extent. In India, 150 million women work in the informal sector.

Position in India

Gendered Marketing and Gender Expectations may explain the existence of the Pink Tax. Companies indulge in gendered marketing by creating fictitious distinctions between products for men and women.Marketers suggest that women are willing to pay for specialised and visually appealing products. Same or similar products are advertised and packaged differently, raising their costs and hence, the pricing.  

Value Added Tax, or VAT, is the most widely implemented consumption tax across the globe. In India, the introduction of Goods and Services Tax (GST) in 2017 marked a significant reform in the country’s indirect taxation regime by subsuming multiple indirect taxes such as VAT, service tax, excise duties, etc. A comprehensive, multi-stage, and destination-based tax which is levied on the value added at each stage of the supply chain of goods and/or services up to the final consumption; GST seeks to counter the effect of cascading taxation. 

When GST was introduced, sanitary napkins, sanitary towels and tampons were taxed at 12%. However, feminine hygiene products have been exempted from tax since July 2018 and are taxed at 0%. 

While identification and removal of the “tampon tax” is a basic but essential step in the right direction, studies show that the Pink Tax is not a concern in the mainstream discourse. Although there has been an increase in awareness regarding gendered pricing, the consciousness remains limited to women’s organisations and a few individual consumers. Despite there being awareness regarding gender-based price differences, the Pink Tax, as a studied phenomenon, escapes the common psyche. The price differential is believed to be a result of varying factors such as a management decision, marketing strategy, or aimply a way of pricing itself. 

Recently, a study was conducted using household data from various households from 2015 to 2022, which presented indirect evidence of the Pink Tax in India. The magnitude of tax differed across states, and it was found that women often paid two to six times more for certain products. On average, women-only households end up spending around 300$ more per year due to this price difference. The study used an unbalanced panel dataset comprising an average of 100,000 households per year from 2015 to 2022, derived from the Consumer Pyramid Household Survey (CPHS) conducted by the Centre for Monitoring Indian Economy (CMIE). The survey provides detailed data on consumption expenditure ranging across commodities, along with characteristics of the households such as location (urban/rural), age, income, occupation, education, and household size. The survey examined household expenditure on comparable goods used by men and women. The study employed econometric tools such as linking expenditure analysis to a gender variable and multivariate controls for household and economy level factors to reveal evidence of Pink Tax across various product categories – clothing and footwear, cosmetics and toiletries (such as deodorants, perfumes, powder, and creams) and others (parlour and spa). While the evidence was in support of the presence of the Pink Tax in India, there are significant geographical and inter-state variations in the magnitude of the tax. This indicated that the burden of gender-based price differential is not uniform across the country. An interesting observation in the study was that, on average, men-only households in certain low-income states such as Assam, Bihar, Madhya Pradesh, Uttar Pradesh, and Rajasthan spent a higher amount on these products. Nonetheless, the primary conclusion remains that gender-based difference in the pricing of commodities exists on a structural level and require immediate attention. 

While constitutional provisions under Article 14 (equality before law) and Article 15 (protection against discrimination against sex), as well as Section 2(47) “Unfair Trade Practice” of the Consumer Protection Act, 2019 may be deployed to make a case against Pink Tax, India lacks legislation or strong policy decisions which specifically targets Pink Tax or gendered pricing of products. Since “Pink-Tax” does not flow as a culmination of specific legislation(s), scrutinising its constitutional validity on grounds such as arbitrariness or reasonable classification becomes challenging, considering the lack of an identifiable state action. 

Falling between the intersection of tax law, consumer law and anti-discriminatory policies (India is a signatory to the Convention on the Elimination of All Forms of Discrimination Against Women – CEDAW), Pink Tax has become a blind spot for policy considerations. It is important to view it as a structural-economic concern rather than placing the onus on consumers for making certain choices, especially considering the fact that gendered pricing of products remains largely hidden. 

Prospects for Reform?

There have been global attempts to mitigate the impacts of the Pink Tax through legislations. The Gender Tax Repeal Act of 1995, passed by the legislature of California, is one of the few early attempts. This act aimed to eradicate differential gendered pricing of services such as hairdressing and dry-cleaning. A similar law was passed by New York City in 1998. Gender-based pricing of cosmetology services is prohibited in the state of Massachusetts by the Massachusetts Public Accommodations Act.

The bill for the Pink Tax Repeal Act was first introduced by Rep. Jackie Speier in the 114^th Congress, which was itself modelled after the 1995 California Law and would prohibit differential pricing for men and women on consumer goods and services which are substantially similar across the nation. Thus, unlike prior legislations, which were state-specific, this bill proposes federal legislation. Recently, in March 2024, the bill for the Pink Tax Repeal Act was introduced in the House, sponsored by a Congresswoman from California, Norma Torres; however, it was not enacted since it did not receive any vote. 

Regulatory intervention by the government is warranted in the form of legislation which acknowledges and comprehensively addresses the issue of Pink Tax. Although Pink Tax is not levied by the government, given its widespread macro and microeconomic implications, it should not be exempted from public discourse or policy attention, considering the fact that it has, and continues to, place a disproportionate economic burden on women. However, such policy intervention is not feasible from both an economic and policy lens without proper data collection and statistical analysis. Surveys on gendered pricing of products have been conducted across various jurisdictions, including the USA, the UK, Argentina and Colombia. The government, private and public organisations and corporations must all come together to raise awareness against the gendered pricing of common consumer products so that both consumer-producer interests are safeguarded. 

While the unpaid domestic labour, persistent gender pay gap, absence of women in managerial positions due to lack of familial support, and lower valuation of work undertaken by women have all gained traction in the past few years; meaningful discussion around these realities remain largely limited despite organisations such as the International Monetary Fund, World Bank and European Investment Bank highlighting the importance of gender equality for economic growth and development. Despite the recognition being largely normative, the existence of the Pink Tax has managed to escape our collective psyche.  

Pink Tax directly impacts a woman’s purchasing and spending power, reduces the consumer surplus and is a hidden opportunity cost. The capitalist nature of modern economic structure has normalised the growing inequality amongst various groups of people, while societal norms and marketing gimmicks continue influencing consumer behaviour. However, the broader economic implications of such disparity resulting from the confluence of unequal remuneration and reduced spending power remain largely understudied. 

In light of the above, the branch of welfare economics may prove to be a useful tool in analysing the repercussions caused by the Pink Tax and gendered pricing of products, as it focuses on the well-being and standard of living of the people. It goes beyond measures of real income and GDP and lends itself to a more comprehensive set of factors, such as healthcare, education, a safe environment, etc. The impact of the Pink Tax can be measured on the standard of living of women and compared against the impact of gendered pricing on the standard of living of men. For instance, the income saved from high grooming costs may be diverted towards education, healthcare, investments, etc. 

While widespread consumer awareness can help us make choices that are lighter on our pockets, the burden should not fall on the consumer. The concern is much larger, and so must be the solution. The onus also lies on the big corporations to self-regulate their pricing strategies that is fair and non-discriminatory, thereby restoring consumer confidence.

Conclusion

The persistence of gender stereotypes, such as assumptions about the preference of women towards certain colours or their being high-risk borrowers, combined with a general lack of awareness regarding gendered price differences, continues to reinforce systemic gender biases. Corporations capitalise on these, and profit from products specifically targeted at women, which has led to the development of the phenomenon of Pink Tax. Despite being functionally similar, products marketed towards women are priced considerably higher than those for men. This form of regressive and selective taxing based on gendered consumption patterns demands immediate recognition and action. Although the term“Pink Tax” came to light over three decades ago, public awareness remains shockingly undeveloped. Without widespread awareness and targeted examination of the issue, through analysis of the economic implications of the Pink Tax, the prospect for meaningful reform seems bleak. It is therefore imperative that we cultivate accountability and understanding regarding the Pink Tax to foster systemic change.  Reforms in the form of statutory intervention after proper data collected and statistical analysis of the quantum impact of the issue are needed in India to adequately examine and deal with this phenomenon.

The author is student of National Law University, Delhi.