GST is applied to tampons but not to incontinence pads. Viagra is exempt from GST but nipple shields for breast feeding mothers are not. Breakfast cereals are GST-free but breakfast bars and drinks are taxable. We explore the political football of GST exemptions.
Australia’s goods and services tax (GST) is messy. To ensure that the GST passed Parliament, a deal was brokered to exclude certain items including fresh food, education, health and child care. The reason for the carve out was to ensure that low income earners are not adversely affected by the GST on the necessities of life. Our New Zealand neighbours however, took the simpler approach and apply GST to most things, leaving the social security system to target the needs of low-income earners.
The problem with the carve out is that the boundaries between different products and services are not clear-cut or intuitive, creating anomalies between the tax treatment of different items. Feminine hygiene products are one of those anomalies. For example, feminine hygiene products are not considered a health product but pads for incontinence are as they are required for a medical condition. Toilet paper and nappies, arguably also essentials of life, are also taxed.
Treasury has undertaken consultation to define what a feminine hygiene product is to remove it from the GST. The States and Territories have agreed to remove the tax. The Federal Government has stated that it intends to remove the tax on tampons from 1 January 2019 but as yet, no legislation has been introduced into Parliament to effect the change.