22 Advancing Gender Equality in Nepal: Refining gender-responsive budgeting for transformative impact 8. Enhancing Gender Equality Through Gender­Responsive Revenue Policies GRB aims at increasing gender equality through both public-revenue and public-expenditure policies. Most early GRB work has focused on the expenditure rather than on the revenue side. In recent years, there has been more research on gender and tax policy issues(see Annex 5 for selected references), which brings to the surface how tax policies impact different groups of women and men differently, and can have quite sizeable impacts on gender inequalities and gender gaps. So, a next step to enhance GRB work is to focus on integrating gender equality issues in public revenue, taxation and overall fiscal policy. Research highlights a number of important issues related to public revenue: First, the size of the fiscal space(i.e. overall public revenue, usually measured as a share of GDP) is highly relevant for policies promoting gender equality. A government’s capacity to reduce gender inequality is determined in large part by its tax revenue, and which groups of society contribute how much to tax payments. A high level of tax revenue, if raised progressively and spent wisely, enables governments to fund the services, social security and infrastructure that promote gender equality and women‘s empowerment. 8 The composition of public revenue, especially which tax contributes how much, is highly relevant. Given that women have historically represented small parts of the formal workforce in Nepal, a shift towards indirect taxes and taxing the informal economy are likely to have a disproportionate effect on poorer households, and women in particular. It is important to increase the understanding whether, and in what specific ways, tax policies affect the ability of women to participate in the workforce and carry out their caring responsibilities. 9 Formal direct taxes are less relevant for women in lower-income contexts, given their high participation rates in the informal economy. Instead, presumptive taxes, 10 user fees and informal taxes place a disproportionate burden on low-income women. Also, tax administration can be of importance to gender equality. One aspect is how effective tax administration is in counteracting tax avoidance and corruption; another one is how tax payers can interact with tax authorities. Overall, any assessment of a tax policy’s impact on gender equality needs to consider revenue and expenditure together to ensure that the positive effects of tax policies are not undermined by budgets, or vice versa. The Government of Nepal has introduced several affirmative tax exemption measures to empower women, increase the number and proportion of women in economic activities. These measures 8 Elson, Diane, Seth, Anuradha(ed.)(2019): Gender equality and inclusive growth: Economic Policies to Achieve Sustainable Development, UN Women, https://www.unwomen.org/en/digital-library/publications/2019/01/gender-equality-and-inclusive-growth; 9 Joshi, A.; Kangave, J. and van den Boogaard, V.(2024) Engendering Taxation: a Research and Policy Agenda, ICTD Working Paper 186, Brighton: Institute of Development Studies, DOI: 10.19088/ICTD.2024.017 10 A presumptive tax is a simplified taxation method for small businesses and the self-employed; as it is often based on estimated income levels, it might disadvantage the very low-income groups.