IOWA LEGISLATURE

Iowa sales tax exemption on feminine hygiene products moves forward

'Pink tax' added to bill that exempts adult diapers from sales tax

The Iowa State Capitol in Des Moines. (Liz Martin/The Gazette)
The Iowa State Capitol in Des Moines. (Liz Martin/The Gazette)
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DES MOINES — Rep. Amy Nielsen, D-North Liberty, thought she would get some Republican support for her “pink tax” amendment to create a sales tax exemption for feminine hygiene products.

“I had it drafted with Gov. Kim Reynolds’ language so Republicans would have a harder time dismissing it,” she said.

Still, Nielsen was surprised that it was unanimously approved.

“I did not expect all of them to vote ‘yes,’ ” she said.

The amendment to exempt the sales price from the sale of feminine hygiene products, including sanitary napkins, tampons or other similar items was tacked on to House File 2641, the annual Department of Revenue bill the House approved 91-6 Thursday.

It now goes to the Senate where Ways and Means Committee Chairman Jake Chapman, R-Adel, said Friday morning no decision has been made on the bill or amendment.

Iowa is among more than 30 states that either have adopted or are considering proposals to exempt feminine hygiene products from sales taxes.

“It’s unfair to half the population to pay a tax on a medically necessary product. It felt like a parity issue,” Nielsen said.

She called her amendment a “perfect fit” for the bill because among the changes in the 93-page bill was an exemption for adult diapers for Medicaid recipients.

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“If you’re going to exempt adult diapers, it shouldn’t matter what’s coming out that you need to absorb,” Nielsen said.

The Legislative Services Agency fiscal note on the bill said there was the average cost of adult diapers for 16,120 Medicaid enrollees in fiscal year 2018 was $960 per person or $15.5 million. That total is expected to grow by nearly 3 percent a year.

Combined, state, school infrastructure and local-option sales taxes add almost 7 percent to the price of taxed goods, the Legislative Services Agency said.

That would amount to a loss in tax revenue of about $800,000 a year and another $1.6 million if the “pink tax” exemption is added, according to analysis.

Nielsen thinks the impact will be minimal.

“If you give women more money in their pocket, what are they going to do? They’ll spend it. I know I will,” she said. “So the lost revenue won’t be too bad when we all go out and buy stuff we really like.”

Legislative services fiscal analyst Jeff Robinson thinks a good economic model would show that about $20,000 of an $800,000 tax savings would return to the state coffers as a direct result of the tax exemption.

“But some people save tax savings — 0 percent immediate return of revenue — and some people buy additional health insurance with the savings — 1 percent return — and some people use it to buy a better car — 5 percent to the Road Use Tax Fund — and some people buy something that is tax-exempt like medicine” or spend it out of state, both which return nothing to the state, Robinson said.

Comments: (319) 398-8375; james.lynch@thegazette.com

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