THE BRITISH government currently slaps a 5% Value Added Tax (VAT) on sanitary products. But some view the “tampon tax” as an affront to women, who have little choice but to bear the burden of the levy. The government has been prevented from reducing the rate to zero by EU rules, which limit how much countries can lower VAT rates on some goods. But on March 17th, George Osborne rummaged around for a rabbit in his post-budget hat, and revealed progress towards a new VAT arrangement with the EU that would give him the freedom to ditch the hated tax.

THE British government currently slaps a 5% Value Added Tax (VAT) on sanitary products. But some view the “tampon tax” as an affront to women, who have little choice but to bear the burden of the levy. The government has been prevented from reducing the rate to zero by European Union rules, which limit how much countries can lower VAT rates on some goods. But on March 17th, George Osborne rummaged around for a rabbit in his post-budget hat, and revealed progress towards a new VAT arrangement with the EU that would give him the freedom to ditch the hated tax. Mr Osborne will be glad to end the political headache; in November last year he compromised by pledging to give the £15m ($22m) raised from the tax to charity. This pleased some, though others pointed out that as some of the funds would go to domestic violence charities, this amounted to women paying to solve problems caused by men. More recently, eurosceptics grumbling about EU power have been threatening to embarass the government by supporting an amendment to a government bill that would scrap the 5% tax. Any new deal with the EU would show that the transfer of power between Britain and Brussels can run both ways.

Scrapping the tax makes for more palatable politics, but leaves economic questions. Working out a rationale within the British system of VAT is a fool’s errand; products that enjoy the reduced rates are meant to be necessities, but the definition of a necessity is loose. Tampons would join things like ostrich meat and helicopters in the zero rate category, whereas toothpaste and toilet paper will face a rate of 20%.

Normally economists worry about applying different rates of tax to similar products, for fear of distorting behaviour. Why should the government nudge customers towards jaffa cakes and away from chocolate-covered digestive biscuits by applying a lower rate of VAT to the former? It also wastes resources as companies battle for their product to meet the zero-rated category criteria. The justification is normally made on distributional grounds: the poor spend more of their income on zero-rated goods, so moving towards a uniform rate would hurt them more. A VAT on tampons is paid for by women rather than men, so any move to get rid of it would redistribute towards women. (Men’s razors attract the full 20% VAT rate, not 0% as some campaigners have claimed in the past.)

The bigger question is whether VAT is the best way to redistribute. One vision of an ideal tax system applies a uniform rate of VAT on all final consumption, and then uses the direct tax and benefit system to do the heavy lifting when it comes to redistribution. This would minimise ugly distortions, remove any government meddling over which types of consumption are favoured over others, and focus different bits of the tax and benefit system on what they do best. But even a purist economist can see that this would be difficult politics.