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Further implications
According to The Age's national political reporter, Judith Ireland, the Labor party will support Treasurer Joe Hockey 'on his mission to convince the states to remove the GST on tampons and other women's sanitary products'. In her article, 'Labor backs Joe Hockey's bid to remove GST on tampons', Judith Ireland quotes shadow treasurer Chris Bowen as saying, 'the party would support the move, if the government had a way of sorting out the change with the states and territories.'
In light of this and of the fact that so many of the states have already stated their support for the idea, it seems likely that Labor will remove the GST from tampons and other feminine hygiene products if they returned to government. It is also likely that Labor would replace the money lost by this move with a GST on digital downloads, as Opposition leader Bill Shorten has called for the current liberal government to do.
It is also problematic that state governments will be as good as their word and support the removal of the GST from feminine hygiene products it a federal government ever actually agree to this. Currently the federal government can claim that the issue is in the hands of the states and thus, not one it can act on. At the same time, state and territory governments can safely support the removal of the tax, given that the current federal government appears unlikely to attempt to do so. The proof of states' genuine commitment to this issue will be tested later in the year at the next meeting of state treasurers. A couple of treasurers have pledged that they will use this occasion to declare their support for the removal of the tax. It will be significant if they do not do so.
Further, should a Labor government grant this exemption to the GST, it may well find itself facing more calls for exemptions on other items, such as nappies and toilet paper. A removal of the tax from any item is also likely to result in any efforts to boost government revenue by increasing the GST or expanding the range of items it covers being met with even greater public hostility.
Taxes are not popular and there are always reasons to oppose them. Given the growth in Australia's budget, it seems likely that at some time in the future there will be proposals to increase the various tax rates in this country, for both direct and indirect tax. Such proposals may well be even more strongly resisted than taxes on feminine hygiene products. The current debate reveals that a tax increase will only be accepted if it can be shown to be equitable.