Breaking Glass Ceiling Through Tax Policy: A Tribute to Women

By: Erikson Wijaya, the Directorate General of Taxes officer

More than a context of being, a woman is a place to back. It is also where life starts and in which love is eternal. Before gender equality was introduced, we understood that women were the center of familial things. Nowadays, everything is connected, and the existence of women has become more prominent. They represent themselves more than a mother or symbols of domestic chores. They have played more significant roles than guaranteeing a nation's continuity. Many related issues involving women have emerged in the last decades to show the urge for women's roles in more extensive aspects of life. And tax is not an exception. Because they are now a leader, a professional, a worker, and sometimes also a breadwinner, but at the same time, they still fight on the same glass ceiling that everyone, especially men, may not be aware of.

The Glass Ceiling

The glass ceiling describes the invisible barriers that stop women from pursuing career advancements and growth. Social norms put women in a limitation due to some burden following them. All obligatory tasks to maintain routine and household work are attributed to women, preventing them from pursuing higher career achievements. The Glass ceiling interacts with cultural biases toward women, leading to vertical discrimination. It may somewhat negate biological differences between men and women, including duty leave for delivery, pregnancy, breastfeeding, and period. The challenges working women face are remarkable in their role as breadwinners, supporting and providing for their families. Above all, the glass ceiling comes in many sides of every woman’s life. However, what is less frequently discussed is utilizing tax policy to minimize them.

Tax Policy Optimization

To put it in a broader view, addressing the glass ceiling phenomenon is not about combating gender inequalities but boosting more significant economic impact. Paving the way for women to work as professionals is a prerequisite to creating an inclusive environment in the current context. OECD (2022), in its publication on Tax Policy and Gender Equality, reveals that tax policy can contribute to gender equality and to governments' efforts to reduce inequalities. A growing body of research shows that even in tax systems that do not include overt gender biases, other implicit biases exist due to the interaction of the tax system with the differences in the nature and level of income earned by men and women, consumption decisions the ownership of property and wealth, and the impact of disagreements social expectations on male and female taxpayers.

Feasible space for tax policy to support women are in Personal Income Tax and Labour Tax. Those taxes possess room to apply relaxing policies to alleviate the tax burden for women. The main tax subject on this issue may refer to working mothers. The tax burden should impact them—some recommendations include providing additional tax credits for working mothers. It is called Working Mother's Child Relief (WMCR) in Singapore. It is given based on the child's order. This is then matched to a percentage of the earned income. WMCR percentages are added together if working mothers claim for more than one child, and the total is capped at 100% of the mother's earned income. This policy encourages married women to remain in the workforce after having children.

Many more countries will likely consider applying tax deduction facilities for women. They could be substantially similar but have some different names. WMCR in Singapore equals childcare expenses in Canada, working tax credits in the United Kingdom, and individual tax relief in Malaysia. Those programs promote deductions on tax expenses borne by working mothers—another possible scheme including tax for women owning a business. The exemption could be given to support women-owned businesses. Benefit covers tax-free to a certain percentage of income earned. It is a common practice. Countries dealing with gender-specific tax systems deploys this policy to minimize gender discrimination and motivate more women enrolling in business activity.

But what about in Indonesia? Studies conducted by Widodo (2020) indicated that no unique relaxation has been given to those working women with family responsibilities in Indonesia. In this case, the proposed policy recommendation for women's tax care consists of a tax deduction for women working in the formal sector and a tax reduction for women who own businesses in the informal sector. Some perspectives believe that the goal to create a gender-neutral tax system is the reason behind this. However, there is still a long way to go since the impact of gender in taxation is not the government's primary focus. Some radical changes in tax regulation within the last three years do not signify any alteration to tax policy on women.

Conclusion

Without leaving their nature to nurture a family, women need real action to support their choice when they decide to work as a professional. Working could be another language of love to keep their family. The glass ceiling phenomenon will surround them once they step into professional work. Tax policy could be an instrument to fight it. Mainstreaming gender equality demands a follow-up action to be applied. Because women deserve fairness in the tax system, it is the most proper response to rapid changes in present social and business life. OECD has proposed some promotive action to support this, including deduction and tax burden reduction. Many countries respond to this recommendation and apply it to their tax system. Indonesia is on its way to making the choices. We must believe that tax facilities can incentivize women to join the workforce or run their businesses. At the same time, it is also a gate to make women be present and play a more significant role in supporting life.

*) This article represents the author's personal views and does not represent the stance of the institution. 

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