Commonwealth Women Parliamentarians (CWP) chapter launch; Sanitary Towel VAT exemption and Gender Based Budgeting: Treasury briefing

Multi-Party Women’s Caucus

14 September 2016
Chairperson: Ms R Morutoa (ANC)
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Meeting Summary

Ms Thoko Didiza, newly-elected Chairperson of the Commonwealth Women Parliamentarians (CWP) briefed the joint Multi-Party Women’s Caucus (MPWC) on the launch of the CWP Chapter. As a member of the Commonwealth Parliamentary Association (CPA), her main focus would be to promote democracy and sustainable development, as well as to engage constantly on the challenges faced within the country. Women felt that it was important to have a structure within the CPA that would focus on legislation and increase the representation of women in parliaments all over the world. Women wanted to have the opportunity to advocate for the challenges faced by other women in society, as well as those who were a part of the CPA.

She went through the CPA framework, indicating that there were four sub-regions as well as sub-regional representatives in Africa. She suggested that the MPWC forum be formally launched as a CWP structure. It should discuss the implications of taking up the platform and take the decision internally. Thereafter, a sub-committee would be selected.

The Chairperson said it would be necessary to discuss the launch of the CWP Chapter. Members had agreed that it would be a great platform to interact with women in parliaments from across the globe. A steering committee could meet with Ms Didiza to receive clarity on what was expected of the MPWC.

National Treasury briefed the MPWC on its response to a request for value added tax (VAT) exemption on sanitary towels. The main focus of the presentation was to develop the best way to make sanitary towels available to all who needed them. It pointed out that tax was used mainly to fund the government, to progressively redistribute from the rich to the poor and to change behaviour that would be detrimental to one’s health. The problem that Treasury had was that the rich ended up benefiting more from lowering tax, thus undermining its redistribution and revenue objectives. The government had targeted expenditure programmes to fund the poor, which had been generally more effective than lowering taxes. Treasury was willing to support the Departments of Health and/or Education by providing additional funding for feminine hygiene and sanitary products to be made available free of charge at schools and clinics.

Treasury said that between the 2013/2014 financial years, an estimated R20.1 billion had been lost from zero-rating VAT on 19 basic food items. Immediately following the zero-rating of illuminating paraffin in 2001, more requests had been made, including household candles, books, red meat, canned vegetables and now sanitary towels. It felt that zero-rating sanitary towels would create a difficult dynamic for dealing with continuous requests. Providing relief to the poor through exemptions and VAT zero-rating would likely be regarded as unsound tax policy and ineffective social policy. Reducing VAT rates for “necessities” to reduce the tax burden on the poor was an ineffective way of dealing with the problem, as the rich would consume more necessities than the poor.

The MPWC was not satisfied with the suggestions made by National Treasury. A Member quoted the words of the President at the 2011 State of the Nation Address, where he had said that the state would provide free services related to sanitary towels for the indigent. Why had Treasury had not responded to the call of the President five years later? The MPWC said it stood in solidarity with a “VAT must fall” proposal. The National Treasury would have to find ways of raising the money lost through exempting VAT on sanitary towels, as the matter was non-negotiable. The women within Parliament were prepared to stage a protest if that meant that National Treasury would begin to take the matter seriously, and deal with it as a matter of urgency. 

Meeting report

Launch of Commonwealth Women Parliamentarians (CWP) Chapter

Ms Thoko Didiza, newly-elected Chairperson of the Commonwealth Women Parliamentarians (CWP) briefed the Joint Multi-Party Women’s Caucus (MPWC) on the launch of the CWP Chapter.

As a member of the CPA (Commonwealth Parliamentary Association), her main focus would be to promote democracy and sustainable development, as well as to engage constantly on the challenges faced within the country. Women felt that it was important to have a structure within the CPA that would focus on legislation and increase the representation of women in parliaments all over the world. Women wanted to have the opportunity to advocate for the challenges faced by other women in society, as well as those who were a part of the CPA.

The CPA headquarters were in London. The executive met annually at a national conference in any CPA member state willing to act as host. It had functional regions, and South Africa fell under the African region, whose headquarters were in Tanzania. An annual membership fee had to be paid internationally, as well as to the African region, through the headquarters.

Ms Didiza described the CPA framework, and said that there were four sub-regions with representatives in Africa. South Africa, Namibia, Lesotho and Swaziland fell under the Southern African sub-region, while the Central African sub-region included Mozambique, Zambia, Malawi and Botswana. The East African sub-region consisted of Rwanda, Kenya, Tanzania, the Seychelles, Mauritius and Uganda. Cameroon, Nigeria, Ghana and Sierra Leone were part of the West African sub-region. The Gambia, a West African country, had recently withdrawn from the CPA as it did not agree with some of the CPA’s principles. Zimbabwe had also withdrawn, due to its past relations with the United Kingdom as well as with some of the states that formed part of the European Union.

The CWP structure included a steering committee, which included the representatives of the sub-region, and each country rotated to represent its region. Lesotho would be operating in the steering committee for the Southern African region between 2016 and 2018. Mozambique would be co-ordinating the central African region, while the East African region would be co-ordinated by Mauritius and Nigeria would take the place of Cameroon for West Africa. The executive leadership included the Chairperson and vice Chairperson, who had to be elected during the annual CWP Conference. At this year’s CWP Conference in Mauritius, Ms Didiza had been elected as Chairperson. The vice-Chairperson would be elected the following year, in 2017. Within the CPA structure, which feeds into the CWP structure, there were branch representatives. In South Africa, these were drawn from the National Assembly (NA) and National Council of Provinces (NCOP).

She informed the Multi-Party Women’s caucus about the newly formed South African branch, which had started in August 2015. At the end of each term of office, a branch had to be launched within the new term by the Parliamentary office in charge. The CWP Chapter, however, had not been launched. She suggested that the MPWC forum be formally launched as a CWP structure. She recommended that the Women’s Caucus discuss the implications of taking up the platform, and that the decision be made internally. Thereafter, a subcommittee would be selected. She explained that countries with a MPWC would form part of the CWP Chapter, but those countries that did not would have to create their own CWP Chapter.

The CWP had worked on a three-year strategic plan from 2015-2018, as well as on the rules and regulations which would be a guideline for the work that the CWP needed to complete. The next conference would be hosted in Nigeria. South Africa had managed to form Chapters in Kwa-Zulu Natal, where there would be a meeting during the following week, the Eastern Cape, Mpumalanga, Free-State and Polokwane, Limpopo. The CWP felt that it was necessary to launch branches before the year end. The MPWC would decide on the best date to launch the CWP Chapter of the CPA structure.

Discussion

The Chairperson thanked Ms Didiza for the briefing, and congratulated her on her newly elected position. She mentioned that at a round table discussion in Pretoria, she had asked her to elaborate on South Africa’s participation at the CWP Conference.

Ms Didiza said that all the sub-regions in Southern Africa were well represented, as well as the national branch. The main concern was to ensure that all the CWP branches officially launched their Chapters. During the conference, the CWP had been able to interact with different regions, including Cameroon, which had indicated improvement, as more women were represented in Parliament -- the number of women had risen from 18% to 35% since adopting the CWP electoral law. This law ensured that during elections, parties which submitted lists that did not meet the specified requirements for having a certain percentage of women candidates in electable positions, would be rejected. Women in Cameroon had tried to fight for their rightful positions within political parties for years, but had been unsuccessful until the electoral law had been officially amended.

One of the biggest challenges women in other countries were facing had to do with receiving funding during elections to run their campaigns. It was also difficult for women to participate in elections because they would be violated, threatened and be victims of abuse. Different countries had managed to share their experiences in putting together legislative laws that sought to protect the rights of women during elections, and advocated for women’s empowerment.

The Chairperson asked about the incident with the country in the African region that had refused to elect a new Chairperson, as they had preferred that the Chairperson of South Africa’s National Council of Provinces (NCOP) should take over from the previous CWP Chairperson.

Ms Didiza said that prior to the conference, the CPA had lost its Treasurer-General for the African region. He and the Chairperson of the CWP had passed on in July. The African region had requested that the term of the international treasurer be completed by someone from the African region. The executive committee had met and recommended the chairperson of the NCOP to complete the late treasurer’s term. The West African region had challenged the suggestion, as they felt that the position had to be filled by a West African member, as the region was under-represented within the CPA structure. However, the rules stated that if a region did not pay for its membership, it could not participate. Furthermore, the West African region was not doing the work as required. The matter was sent to the sub-regional representatives and the sub-regional caucuses within the international CPA structure. The sub-regional structure had concluded that Ms Thandi Modise, Chairperson of the NCOP, would be best suited to fill the position.

Another challenge discussed at the Conference was that the CPA was not a diplomatic organisation, and it did not have a multilateral status. In London, the CPA was registered as a charity. This meant that if the CPA were to discontinue, all contributions would be returned to the authorities in London. The other branches were concerned about paying contributions that would be recorded as charity in another country (Britain) and so the CPA’s status had to be changed. The international CPA conference to discuss the challenges highlighted was meant to have been held in Pakistan in 2015, but members of the CPA had not been comfortable about travelling to the country due to the unavoidable tension. In 2016, the Conference was meant to have been held in Bangladesh, but due to the challenges faced within the country, the meeting could not take place. The CPA had tried to encourage a number of other countries, including those within the African region, but Botswana, Kenya and Uganda had felt that they were not ready to host such a large meeting. The secretariat in London had promised to provide £500 000 (about R9 million) to cater for the Conference, but had also refused to host the international conference.

The Chairperson allowed Members to give comments as well as ask questions.

Ms N Mafu (ANC) said that she did not need clarity and did not have questions either. She stressed that the MPWC had to formally agree that the CWP branch needed to be launched. She felt that it was essential for the MPWC to engage fully with many of the issues affecting women that were highlighted, as it would broaden the Caucus’s understanding of international politics.

A Member asked what the Women in Parliaments (WIP) global forum was, and what role it played. She said that on several occasions the WIP had sent invitations to its gatherings, but it was hard to attend meetings with women internationally without having engaged with those had been affected by issues nationally.

Ms C Pilane-Majeke (ANC) congratulated Ms Didiza for being appointed as the Chairperson of CWP. She also supported the launch of the CWP Chapter. She felt that it was good to take part in the regional, sub-regional as well as the international processes. She asked the Committee Members to analyse the extent to which the Chapter would benefit South Africa. She was concerned about taking on new challenges, when many of those faced regularly were already being neglected.

Ms M Semenya (ANC) supported the suggestion that the MPWC be confirmed as the structural branch for the launch of the Chapter.

Ms D Raphuti (ANC) asked whether South Africa could not host the international CPA Conference which was meant to have taken place in Bangladesh. She felt that it was a good opportunity for the country to have its own Chapter launched and be well recognised.

The Chairperson said that it was quite evident that the launch of the CWP Chapter had to be discussed further. She mentioned that the MPWC steering committee could meet with Ms Didiza for the logistics, as well as to receive clarity on what was expected of the MPWC. She said that people were concerned about the Commonwealth Parliamentary Association, and felt that it would be beneficial for the current Members of Parliament to remain well informed. She also congratulated those who had represented South Africa at the CPA’s annual conference in Mauritius.

Ms Didiza announced that the Women in Parliaments (WIP) was a network of women, and not an organisation. It had been started by one of the women parliamentarians in the European Union, who had felt it was necessary to gather with women globally to discuss issues that affected women in Parliament. It had created a platform for women to discuss challenges that they faced regularly through interactive meetings across the globe. The most recent meeting in Africa had been in 2015, in partnership with the African Union (AU). Women had spoken about ways to advocate for the Agenda 2063. The meeting that followed had focussed on how women could ensure sustainable development within their countries. Another workshop had been held in partnership with the World Bank. Conferences were held numerous times a year, based on the available sponsorship. In addition, the WIP invited all women registered on the Parliamentary mailing lists, but each person had to cover their own travel expenses.

She said that the South African Parliament was already a branch of the CPA. It had been launched in August the previous year. If the South African Parliament felt that it was able to host the Conference, it would be recommended that the responsibilities were clearly stated. She mentioned that the Parliamentary Speaker was responsible for the Inter Parliamentary Union (IPU), and that Ms Modise, in charge of CPA International, was the person to consult about possibly hosting the Conference. The budget requirements also had to be considered, including all the logistics related to international affairs, such as issuing visas on time, finding accommodation and ensuring that it was feasible to host the Conference within the year 2016. She also mentioned that she would be available to meet with the MPWC steering committee to discuss details about the launch of the new Chapter.

She said that the CWP mandate was not different from the MPWC’s mandate, but its main focus was on increasing the amount of women in Parliament, as well as electoral reform. It was important to have the voice of women represented in legislation and in structures responsible for making decisions that would ultimately affect women in the country.

National Treasury on VAT exemption for sanitary towels and gender-based responsive budgeting

Mr Ismail Momoniat, Deputy Director General: Tax and Financial Sector Policy Division, National Treasury, briefed the MPWC on the Treasury’s response to a request for value added tax (VAT) exemption on sanitary towels. The main focus of the presentation was to develop the best way to make sanitary towels available to all who needed them.

National Treasury said the first question was whether sanitary pads should be made available through the tax system or through the expenditure side of the budget. Tax was used mainly to fund the government, to progressively redistribute from the rich to the poor and to change behaviour that would be detrimental to one’s health. The problem that Treasury had was that the rich ended up benefiting more from lowering tax, thus undermining its redistribution and revenue objectives. The government had targeted expenditure programmes to fund the poor, which had generally been more effective than lowering taxes. He highlighted how condoms had been made freely available through the expenditure side of the budget, rather than lowering or exempting tax. Treasury was willing to support the Departments of Health and/or Education by providing additional funding for feminine hygiene and sanitary products to be made available free of charge at schools and clinics.

He said that lowering VAT could be done via zero rating or exemption, but this method had not proved successful in entirely benefiting the consumer. When zero rating had been applied on basic food items such as bread and milk, the VAT rate had increased from 10% to 14% on the same day. This was a challenge that the National Treasury anticipated should more products be zero-rated or even exempted from VAT. Analysts had demonstrated that in absolute monetary terms, the poor did not benefit as much as the middle and higher class income earners.

Ms Yanga Mputa, Chief Director: National Treasury, said that between the 2013 and 2014 financial years, an estimated total of R20.1 billion was lost from zero-rating VAT on 19 basic food items. Immediately following the zero-rating of illuminating paraffin in 2001, more requests had been made for items such as household candles, books, red meat, canned vegetables, and now sanitary towels. National Treasury felt that zero-rating sanitary towels would create a difficult dynamic for dealing with continuous requests. Providing relief to the poor through exemptions and VAT zero-rating would likely be regarded as unsound tax policy and ineffective social policy. The multiple VAT rates outweighed the possible redistributive gains available from the option.

Reducing VAT rates for “necessities” to reduce the tax burden on the poor was an ineffective way of dealing with the problem, as the rich would consume more necessities than the poor. A 2007 VAT study had indicated that the most desirable VAT system to have was one with the least number of exemptions and zero-ratings. Efficiency and simplicity considerations should dominate, and equity as well as other objectives had to be fulfilled through the expenditure side of the fiscal policy. VAT was seen as a key instrument to secure macroeconomic stability and growth. VAT exemptions and zero-rating were thought to increase the scope for abuse, which resulted in increased administrative and compliance costs.  In other instances, zero-rating did not significantly reduce prices as producers may choose to profit from the low VAT rate by not passing on the lower prices to the consumers.

Mr Momoniat said that Treasury had come up with a suggestion to solve the problem.

Ms Didiza asked the Members to engage with National Treasury, based on what had already been presented, as it seemed as though the solution was moving away from the proposal to remove the VAT expense on sanitary towels. She asked why it was difficult to deal with taxes. Her concern was that moving away from VAT exemption and providing a specific budget through expenditure procedures would not be feasible. Delegating the delivery of sanitary towels to women that needed them most, to other Departments such as Health or Education, would cause a delay. She believed that adding responsibility to the Departments that had already experienced challenges such as providing free textbooks as well as the feeding scheme projects, would not solve the problem.

Mr Momoniat said he was concerned about the direction of the proposal. If the women wanted free sanitary towels, then tax was not the issue because VAT could not be applied to items without a charged cost. It would only mean that the National Treasury would have to make budget provisions for free sanitary towels. However, if the focus was to make sanitary towels cheaper, as the absence of VAT would make them 14% cheaper, then it would be a challenge. With books, National Treasury had been able to indicate that removing the 14% VAT charge on books would not entirely benefit the consumer. National Treasury was trying to avoid further exemptions and zero rates on VAT because it did not create a long term benefit for the consumer. He believed that there was another way to solve the problem without having to remove VAT completely.

He went on to speak about gender-responsive budgeting, but the Chairperson interrupted and asked him to present the solutions for to the issue at hand, as he was going off topic.

Mr Momoniat said that the solution to the problem would be to make funds available either through the Department of Health’s budget, or probably through the Department of Education. The sanitary towels would be made available to schools, universities, etc. He highlighted that just as condoms were made available in most public places, the proposal would be to have the government make those available for free as well. Women who would prefer to buy the sanitary towels, would still pay VAT.

Discussion

Ms Semenya emphasised that unlike other items, women did not have a choice in their need for using sanitary towels. Using condoms as an example would not be an accurate comparison, as women did not decide whether they wanted to menstruate or not. On the other hand, with condoms one could control one’s hormones. She said that the VAT needed to be removed from sanitary towels for all women. She emphasised that women should not be punished for something that was naturally going to take place. She also said that the duty of the government was also to support those that needed assistance, and therefore had to ensure that the women in schools, universities and underprivileged societies also received sanitary towels. Regardless of that obligation, sanitary towels had to be exempt from tax.

A Member reminded the National Treasury that sanitary towels were not a luxury, but were a need for all women. There had been many studies conducted, such as one in Ghana, which showed that girl children would frequently miss school because of their menstrual cycle. She was very concerned that the team from National Treasury was tip-toeing around the real issue. The team knew what the concern was, as women around the country had fully expressed the need for a solution to the problem. She was did not approve of the government not trying to find solutions to the outcry, while non-government organisations (NGOs) had taken it upon themselves to deal with the problems faced by school girls and women in general. She asked that the Women in Parliament lobby to ensure that the Minister of Finance incorporates the provision for sanitary towels in the budget speech. The nation wanted to be assured that the matter was under consideration and that money would be made available as soon as possible.

Ms D Raphuti (ANC) said that the government had placed a high priority on education and health, but at the same time the health and education of young girls was being affected, and the government was not finding solutions to the problem. If the government had already made health and education a priority, and as the sanitary towels issue formed part of gender mainstreaming, the Departments of Health and Education should have dealt with the matter immediately after it had been raised.

Ms L Van der Merwe (IFP) quoted the words of the President at the State of the Nation Address (SoNA) in 2011. He had said then that the state would provide free services related to sanitary towels for the indigent. She asked why Treasury had not responded to the call of the President five years later. The President had recognised the problem, and had said that free sanitary towels had to be provided for school girls who could not afford them. She wanted to ensure that National Treasury would leave the meeting having assured the MPWC that provisions would be made rapidly. She said that if the government could provide free flavoured condoms that were not noisy and smelled good, why were young women being denied their constitutional right to health care and education? Surely the government could provide free sanitary towels? Condoms were lying around the floors in public toilets, and she felt that it was wasteful expenditure. She wanted National Treasury to announce where the budget would be allocated from. Would it be from the Departments of Health and Social Development together? She wanted to see a dispenser to provide sanitary towels to women and school girls from poor backgrounds, and strongly believed that this matter should be non-negotiable.

Mr Momoniat assured the Members that National Treasury fully supported what they had said. It agreed that it was a priority to provide sanitary towels to young girls in particular. He also agreed with Ms Didiza that the delivery of the sanitary towels may become a problem. He said that a budget should be made available to the various Departments, and when the money did not fulfil its purpose, the matter should be investigated. Members seemed to be concerned about providing free sanitary towels to women who could not afford them, so VAT should not be regarded as an issue to begin with.

Ms G Tseke (ANC) interrupted, and said that there was a VAT issue as well.

Mr Momoniat continued, saying that there was a greater need to check where the budget allocations had been made according to the President’s SoNA address, and to investigate how the budget was spent. He had addressed the Members about the VAT issue, because if sanitary towels were free there would not be a need for VAT. He also said that zero rating and VAT exemptions would be more complex to deal with.

The Chairperson felt that National Treasury was still not addressing the issue.

Ms Didiza said that the issue being dealt with was one that violated the rights and dignity of women in the country. In 1994, when Nelson Mandela had said that pregnant women could receive free care in clinics, he had deliberately addressed the principle that dealt with the dignity and rights of women. That issue had not been dealt with in society. The National Treasury had realised over a period of time that basic rights needed to be met. This issue was gender specific, as it did not affect anyone else but women. It impacted on the progress of women all over the world. If it meant that women had to protest to monitor the government’s progress on the presented issue, the women were willing to do so. Her concluding statement was, “VAT must fall!”

Ms N Tarabella-Marchesi (DA) asked how much revenue was received from collecting tax from sanitary items, and in what ways could the revenue lost be generated elsewhere. The Members stood firm on the need to ensure that school children had sanitary towels available in schools, and that all tax was removed from sanitary items.

Ms M Chueu (ANC) said that 52% of the population consisted of women and girls, and if the budget was set up to benefit 48% of the population, the economy would not grow. She felt that by not focussing on women’s needs as well, women were being mistreated by the economy. She stressed that VAT had to “fall” on sanitary towels.

Ms Pilane-Majeke felt that even though the country was moving towards gender sensitisation, the budgets were not gender sensitive.

The Chairperson said that as law makers, it was important to address the Minister, and to have such discussions in the presence of the Minister. It may have appeared as though the Members were attacking the DDG and the Chief Director, but it had just been unfortunate that they had had to be present without definite answers to their questions. She insisted that the Minister of Finance should make himself available for the next meeting.

Mr Momoniat apologised on behalf of the Minister, who was attending meetings at cabinet. He reassured the Women’s Caucus that all the concerns raised had been heard. He warned the Members about using the “VAT must fall” approach, however, as VAT played an essential role in raising funds for the government.

Ms Tseke said the Women’s Caucus would continue to engage with National Treasury.  The women would hold on to the slogan, even if it meant protesting as Ms Didiza had indicated. As the MPWC, the purpose was to ensure that the matter was dealt with urgently. 

Ms Semenya said the issue had already been discussed at the roundtable 2015. She also felt that National Treasury had to speed up the process.

The Chairperson said that she had been disappointed by Mr Momoniat taking offence. She told him that the Members were not personally attacking him, but attacking the system that he too was a part of. She thanked the Members for the contributions, as well as the Members of National Treasury and Ms Didiza for the presentations.

The meeting was adjourned. 

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