Rather than addressing inequality, however, most tax systems promote and perpetuate a culture of gender-based inequality. As a result, the Organization for Economic Cooperation and Development (OECD) advocated that gender-based taxes be discussed at the Group of 20 summit in Bali later this year.

So, what does a gender-based tax mean? In order to better understand this issue, let's first take a historical background of the proposed gender-based tax. Generally speaking, men are the primary breadwinners in the family. Therefore, it is not surprising if they generally have higher income and wealth than most women. Access to paid employment also impacts the size of this gap as well.

The study by Gunnarson et al. (2017) for the case in the European Union shows that the average number of working women is between 46 percent (the lowest statistic is in Greece) and 78 percent (and the highest number is in Sweden). Meanwhile, data from Statistics Indonesia (BPS) for 2021 showed that only 35 percent of women worked in the formal sector. Their number in the informal sector is a little better at 42 percent. In the EU, women earn about 16 percent less than men. In Indonesia, the difference in income between men and women is about 26 percent.

Despite facing greater barriers to earning money than men, women are more likely to be financially strapped. The term "pink tax" is used in tax terminology to describe the practice of taxing women's items more heavily than men's for equivalent products (Guittar et al., 2021). Personal care products, such as deodorants and razors, tend to have the highest price disparity between men and women. Because these products are purchased more frequently than other products, the pink tax arising from their purchase greatly increases women's financial burden over time.

Afterward, women also go through their menstrual cycles, so they need to buy hygiene products like sanitary napkins, tampons, underwear or disposable cups. There are a lot of places where these products are taxed at a very high rate, called a "tampon tax" (Giokaris, 2020). This cycle, which only women go through, is not an option, so they will have to pay more money.

As a general rule, men and women are taxed the same in nominal terms, but the tax system has unintentionally created gender inequality in society because of their differing social and economic characteristics, such as income level and participation in the workforce. To make sure that everyone has the same chance to grow (inclusive growth), the government needs to think about how the tax system will affect equality between men and women, who are different in many ways. These are among the reasons behind the gender-based tax.

Vijeyarasa (2020) classifies the degree of affirmation of gender legislation into four levels of the state's presence on this problem. The first is a gender-regressive policy, which does not take into account the demands and interests of women and girls. This policy disregards not only gender issues but also the fact that it places women in different social, economic, political and welfare status positions.

Second, a gender-blind policy demonstrates a lack of awareness of the distinct requirements of men and women. As an illustration, if a value-added tax (VAT) is expressly imposed on feminine care products and care for children, the elderly or persons with disabilities, it can be gender-blind.

The third is gender-neutral policy, that is, legislation that does not seek to discriminate based on gender on the assumption that gender issues are irrelevant. In general, VAT has a neutral legal status. The Fourth is a gender-responsive policy, which is sensitive to the unique requirements of different genders. The government should employ this fourth approach to account for inequalities in gender characteristics.

Tax policy can be made more responsive to gender inequalities by adjusting the existing tax structure. As is well known, among the taxes currently administered by the central government, income tax (PPh) and VAT have the potential to become tools of gender equity. At the individual income tax level, concrete policies can be implemented to provide allowances for female employees who are pregnant and give birth, to exempt certain income from tax for women who meet certain criteria or to increase the amount of Non-Taxable Income (PTKP) available to women who have given birth or who are single parents. Given that their ability to pay is a primary consideration, it is hoped that such rules will reduce their income tax burden.

A gender tax policy can be pursued at the corporate income tax level by providing tax advantages to businesses that hire more women and provide them with specific work environments. For instance, when Vietnam reduced the corporate income tax rate from 25 percent to 20 percent, it also included prosocial incentives.

Reduced corporate income tax rates are available to businesses that employ a high proportion of female or ethnic minority employees, cover the costs of retraining women who are transferred to other jobs, including tuition fees and full salaries, provide on-site child care, provide maternity leave benefits and pay overtime to women who do not take maternity leave.

Employers who obtain this tax incentive are also required to provide spaces for breast milk pumping and storage, promote women's unions, follow gender equality in the workplace legislation, provide health and maternity care, and contribute to childcare costs.

Gender-based VAT can be implemented by tax exemptions, reduced rates or even zero rates on specified goods or services, particularly those used by women and girls. However, a crucial aspect of this policy to address is the possibility of determining supplies subject to VAT that are not precisely on target. As a result, statutory provisions must specify all kinds of goods and services that qualify as gender-based basic necessities subject to tax exemptions, reduced rates or zero-rates policies.

It is envisaged that through implementing pro-gender equality legislation, more inclusive development can be accomplished in which no group is marginalized. This sense of equality may not always align with other tax principles, such as revenue sufficiency, efficiency and administrative convenience.

However, all of these challenges may be remedied more readily provided there is a responsive political will to address the underlying issue of gender.

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Prianto Budi Saptono is a lecturer in Fiscal Administration at the University of Indonesia’s Faculty of Administrative Sciences and executive director of the Pratama-Kreston Tax Research Institute, where Ismail Khozen is a senior policy analyst.