Gendered Taxation: IMF Tax Advice and the Disempowerment of Women

• In Event: Reshaping the Liberal Order: Strategies of Contestation and Change

Abstract

Case research points to the gendered effects of the value-added tax (VAT), which may particularly disadvantage women by crowding out their economic participation. A key driver of VAT introductions has been the International Monetary Fund (IMF). To counter balance-of-payments woes, IMF advice for cash-stripped countries has frequently focused on shifting toward broad-based consumption taxes while lowering trade taxes and corporate income taxes. We expect this tax policy advice---while ostensibly gender-blind---to lead in practice to a deterioration in women's socioeconomic well-being. To test this hypothesis, we construct a panel dataset for 147 countries from 1980 to 2019 and estimate the effect of IMF programs on women's economic participation, education, and health. Accounting for selection effects, we find that women's life chances deteriorate relative to men's if a country undergoes an IMF program with tax conditionality. We corroborate these findings to demonstrate the mechanism underlying these effects by showing a negative effect of IMF-induced de jure VAT adoption on women's life chances. We provide complementary individual-level evidence from the World Values Surveys based on 98 countries from 1981 to 2019. We show that during an IMF program with tax conditionality, women are significantly less satisfied with home life and report more material hardships. Our results provide systematic evidence of the consequences of IMF revenue prescriptions for women, thereby supporting calls for increased attention to gender-responsive budgeting.

Authors

• Andreas Kern, Georgetown University

• Daniela Donno, University of Oklahoma

• Bernhard Reinsberg, University of Glasgow