UK supermarkets not passing on tampon tax savings to consumers

Savings on tampon tax has not been fully passed on by UK retailers in the form of lower prices, a new report says.

In 2021, tampon tax was abolished when Rishi Sunak, who was chancellor at the time removed the 5% VAT.

As a result, this was said to lead to a 7p drop in price on 20-pack tampons and 5p for 12-pack pads, a saving of £40 for the average woman across her lifetime.

However, retailers were able to decide on how this would be rolled out across products and if they would pass savings on or not.

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The report by not-for-profit advisory firm Tax Policy Associates, has said that retailers appear to have kept the money rather than passing this on to consumers.

Its founder Dan Neidle told The Guardian: “At most, tampon prices were cut by around 1%.The remaining 80% of the benefit retained by retailers. More likely, the retailers took all the benefit, amounting to £10m each year.

“If the benefit of the VAT abolition was passed on to consumers, we would expect to see a significant divergence between price changes in tampons and price changes in the other products,” adding, “we do not.”

According to Assosia data, across grocery retailers Tesco, Sainsbury’s, Asda and Morrisons, the average price of a 14-pack of Always Sensitive pads costs 95p, the same price as in 2020.

The price of 20 supermarket own-label tampons has risen by 3p up from 93p two years ago while 14 own-label ultra regular pads are now 5p more expensive than in 2020.

At Big 4 grocer Tesco, the price of its sanitary products were cut in 2017 and a spokesperson told The Guardian that at this time, “Tesco was the first retailer to cover the VAT on sanitary products”, adding “when we made this decision, we immediately reduced the price of these products by 5% to ensure our customers could benefit.”