ECONOMICAL ANALYSIS OF PINK TAX

April 22, 2021

ECONOMICAL ANALYSIS OF PINK TAX

The term pink tax fetched from the common understanding that usually all products marketed to women tend to be pink in colour. It is another type of economic disparity created between male and female due to the patriarchal structure of society. It is a type of gender-based price discrimination which refers to identical products and services for which women are charged more or taxed more than men for the similar services offered to them. These include everyday items of personal hygiene, clothes, dry-cleaning services, office supplies but are not limited to them.

Research has shown that only 23% of Indians are aware of the term pink tax. This concept caught public attention at the time when 12-14% GST was levied on female hygiene products such as sanitary napkins and tampons. On the other hand, male contraceptives were tax-free as they were considered necessary whereas tampons were considered a luxury. This discrimination spread the wave of widespread protests on social media particularly on Twitter under the hashtag #lahukalagaan meaning blood tax. Online petitions against it got more than 4 lakh signatures from politicians, activists, actors, comedians and common people as a result this tax got repealed in 2018. Research conducted by the New York City Department of Consumer Affairs analysed the costs of hundreds of products used on daily household and concluded that there exists an overall 7% disparity between the costs of all products and that women consumers paid higher prices in 30 out of its 35 product categories. India where already the pay gap is as wide as 19%, the existence of pink tax creates an additional burden on them. Thereby, putting them in a disadvantaged position in society.

Pink tax establishes itself in generally two ways. First, the products or services that are offered to women are generally taxed high in comparison with that of men. Second, the products and services that are sold to women are priced higher than men for identical products.

Pink tax stems from the pressure of following certain stereotypical gender norms to fit in according to set standards of society. The term here in this case it is called gender socialization where people should learn to act according to their sex. Humans are different biologically, physically, mentally and personality-wise. Because they are different, they are taught to act differently as a result of this gender socialization many stereotypes are created in society and they affect how one is treated in society.

After the child is grown, they are introduced to several stereotypes which help in forming their behaviour. For example, parents, peers, society often describe being males as more powerful, strong and agile. Whereas females are described through their beauty, emotions, and fragility. Since women are taught in such a way since their childhood, they tend to spend more on their makeup products, personal hygiene and dressing as compared to men. Gender Socialization leads to the perpetuation of different gender stereotypes which are supported throughout society and ultimately results in gender-based price discrimination known as pink tax.

When it comes to price discrimination, the principle is simple: the firm will catch some of the consumer surpluses by charging various classes of customers different prices. Price discrimination, in other words, is a technique for obtaining more money from customers while increasing total profit. When the profit from establishing segmented markets exceeds the profit from selling to a single market, price discrimination is achieved. Thus, price discrimination is only successful if (1) different market groups can be identified, (2) the groups’ willingness to pay for the good varies systematically, and (3) the high-value group has relatively inelastic demand for the good. Consumers in a fairly inelastic submarket tend to pay a higher price, while consumers in a fairly elastic submarket tend to pay a lower price. It’s easy to link this to gender socialisation. Gender socialisation tells women that they are required to look, dress, and behave a certain way and that they should not deviate from these social norms. As a result, women, on average, as a distinct category from men, have a highly inelastic demand for the “necessities” of life in a society that dictates specific behaviour.

Pink tax price discrepancy is also attributed to product differentiation. Product differentiation is the process advertisers use to distinguish one product from other similar products to get attention from a specific demographic market. Typical ways of creating product differentiation include gender-specific styling and packaging. Manufacturers also attempt to make the packaging more aesthetic, altering the colour schemes of a product, and even highlighting the USPs in various ways to produce a distinct product from others to reach a particular market. For instance, a manufacturer can produce much more generic blue and black cycle helmets than pink cycle helmets, potentially driving up the cost of each pink helmet.

As a society, although we are evolving there are still some stereotypical norms that we carry with us. This as a consequence results in creating a disparity between different sections of society. The price disparity between males and females is created because of gender socialization which in turn burdens women who are already at a disadvantaged position in society because of the huge wage gap. As unfair and unjust gender-based price discrimination is, directly taxing women for their gender is even more abrasive to women as it is a visible attack on being a woman.

The most important thing that needs to be done at the Indie level is creating awareness about the city-based price discrimination as 67% of the population is still unaware of the term pink tax. This can be achieved by launching campaigns on social media handles such as Twitter, Instagram. Another resort is purchasing unisex products and with enough demand, we can force new products to be made in the market and instead of wearing or using ‘blue’ products we must promote industries that are attempting to deviate away from the standard. Companies will undoubtedly be aware of this recognition and shift in customer preferences, which will affect their marketing strategies and pricing policy. Burger King, for example, has already made a public statement opposing the pink tax. In its battle against the gender tax, Billie, a subscription razor business, provides a referral discount called “The Pink Tax Rebate.” This is the path forward for industries: to consciously participate in the battle against patriarchy and benefit by being reform pioneers rather than exploiters.

We must break the subconscious toxic societal notions of women being gullible, sensitive, and submissive to all illogical standards to bring about change in this societal habit of financially oppressing women. And it is incumbent upon us to actively participate in the war against discrimination, as well as to inspire others to do so.

-By Shivangi Goel

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