Gender and tax policy

Tax policy as it relates to gender is a topic of conversation becoming increasingly explored around the world as jurisdictions are presented with the opportunity to look at how policy reforms can help move towards a more gender equal workforce. This is also a topic that KPMG will be exploring in more detail moving forward, as we look to take a closer look at how budgets can positively impact gender in the workforce, as well as the workforce participation gap as a whole.

Grant Wardell-Johnson

Grant Wardell-Johnson

It is important to have diverse views and representation to help expand the limits of what an economy can achieve with greater benefits resulting for all.

Grant Wardell-Johnson

To help kick-start the conversation on gender and tax policy, we recently connected with Grant Wardell-Johnson, Global Tax Policy Leader and Chair of the Global Tax Policy Leadership Group at KPMG International, who has been engaged and challenged by the constantly changing nature of tax and its role in society for over 30 years. Grant’s diverse background in tax policy, tax reform, public policy and regulatory change has provided him with a deep understanding of the connections and nuances on the topic.

Why is gender such an important topic of conversation as multinational organizations around the world navigate ongoing tax policy developments?

I believe it’s important because increased participation from women equals an increase in productive capacity at both the national and global levels. Inviting women to the table helps expand the limits of what an economy can achieve with greater benefits resulting for all.

At a company level, women provide a massive pool of talent that’s essential for the growth of large organizations. More importantly, however, women are essential for an environment of multiple perspectives. This is the foundation of innovation and creativity, which sit at the heart of wealth creation.

Sustainable econonic growth can result from postive tax policy interventions related to gender equality. Can you please provide your thoughts on why that is?

With few exceptions, tax systems throughout the world tend not to be explicitly gender based. However, when taxation interacts with a specific cultural setting — for example, the additional responsibility that is expected of women in parenting — a specific policy can increase a detrimental outcome, rather than reduce it. A common example is the interaction of the tax system with the childcare system. For some women, working in general, or working additional days, is not worth the increased tax and childcare costs, so they withdraw from the workforce. The long-term damage both at the individual level and the societal level is substantial.

What gender biases have you seen to-date in relation to tax policy?

Given there is about a 20% pay gap globally, a tax system that is not reasonably progressive can create a gender bias. Moreover, taxation based on household income rather than individual income has a gender bias and may have the tendency to discourage women when they are the secondary earner. Countries with household taxation tend to have greater gender gaps among couples. The gap between men and women on capital income is greater than for labor income. Capital income has traditionally been taxed at lower rates than labor income, which can further create bias.

An important point to note here is that tax policy should take into account the actual outcomes related to gender. The right policy mix with appropriate incentives, particularly in childcare, can provide important progress, and government budgets around the world should be viewed through a gender lens to allow the actual economic effects to be seen.

It’s clear that gender equality will lead to a more sustainable future, across professions, industries, and more – how have you seen tax functions adapting to move towards gender equality?

There has been substantial leveling of the gender mix in tax functions, which has benefited many aspects of the tax system overall. Historically, this has not always been the case in jurisdictions globally and many regions still have a way to go.

When properly thought through and executed, however, tax can be a very family friendly career path as many organizations are increasingly finding practices that provide more flexible working options. I truly look forward to seeing the movement in this space in the years to come.

What do you think will be the main contributors to helping women grow within their organization and, in turn, help to create a more sustainable future for all?

I personally have a very strong view on this and believe the way forward is cultural expectation and the acceptance of a more equal balance of parental responsibility and care. A transitional journey has been taking place with regards to this and over the last decade far more flexibility has been given to mothers of young children in early care. I believe the next decade should see fathers taking similar time off to care for their children. The language, I believe, of a mother and a father will change as the multiplicity of relationships become increasingly common.

As more and more women pave their way within the tax profession, if you could give one piece advice to the next generation of women within Tax, what would it be?

Tax provides a variety of vantage points into the world, including politics, geopolitics and parliamentary processes. It also provides insights into how organizations make decisions, who and what these decisions impact and the unintended consequences that result — “what if” thinking for some and notions of distributive justice for others.

My one piece of advice is to try to bring as many perspectives as you can to tax in your career. Think through the positions of the many stakeholders and consider how your intuition differs from a strongly rational approach and how a current problem will be viewed in the future. Gender has a great role to play in this breadth of thinking.