Indonesia has made significant progress in reforming its tax administration in recent years. The integration of the Taxpayer Identification Number (NPWP) with the National Identification Number (NIK) marks an important step toward a more efficient and integrated fiscal system. However, an economist and lecturer at the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), Wisnu Setiadi Nugroho, Ph.D., highlights an institutional shift behind the administrative reform, particularly the merging of a wife’s NPWP with her husband’s.
“This issue is not merely about administrative design. It is closely tied to broader policy debates on labour market participation, financial inclusion, and long-term economic growth,” Wisnu explained in a written statement received on Friday (March 27, 2025).
Wisnu noted that as Indonesia seeks to escape the middle-income trap and strengthen domestic economic resilience, increasing women’s participation in the formal economy has become a strategic priority. Fiscal institutions, including taxation, play a crucial role in shaping incentives, defining economic identity, and influencing how households allocate labor and financial resources.
At first glance, the policy may appear administratively rational. Households are treated as a single tax unit, which simplifies reporting and compliance. However, this simplification carries broader implications for women’s economic autonomy, financial inclusion, and recognition of their contributions to household welfare. More importantly, it reflects an assumption that men remain the primary economic actors in the family, while women are positioned as secondary earners or dependents.
“This assumption does not fully align with Indonesia’s evolving economic realities,” he said.
Merging Economic Identity and Labor Supply Incentives
Wisnu explained that the policy of merging a wife’s NPWP with her husband’s creates a structural bias, requiring women to actively opt out of a default framework that assumes economic dependence on their spouse. Previously, married women could have their own NPWP. Under the current system, separate tax reporting remains possible, but only if couples actively choose a separation-of-income-and-assets scheme.
From a policy perspective, he added, the design of household taxation systems is critical. In economic theory, taxation influences labor supply decisions, especially for secondary earners. When the tax system implicitly positions women as secondary contributors to household income, it may weaken labor-market participation incentives or reduce women’s visibility as independent economic agents.
“This is particularly relevant in Indonesia, where female labor force participation is still around 50 percent, compared to approximately 80 percent for men,” he noted.
This gap reflects persistent structural barriers, including limited access to formal employment, unequal caregiving responsibilities, and entrenched gender norms.
“Fiscal policy should help reduce these barriers, not reinforce them,” he emphasized.
Financial Inclusion and Administrative Dependence
Wisnu also pointed out that the NPWP integration policy may affect not only the labor market but also women’s access to financial services. Today, NPWP functions not only as a tax instrument but also as an economic identity required in various financial transactions. Some banks and financial institutions still require an NPWP to open certain accounts, apply for credit, or access investment services.
“When a woman’s tax identity is administratively tied to her husband, procedures can become more complex and, in certain situations, may limit her ability to access financial services independently,” he explained.
Although these administrative barriers may seem minor, their cumulative impact could be significant. Financial inclusion is closely linked to women’s economic empowerment, entrepreneurship, and resilience to income shocks. A fiscal framework that inadvertently restricts women’s access to financial services may ultimately hinder broader development goals.
The Hidden Burden of Family Responsibilities
Gender bias is also reflected in how dependents are recognized in the tax system. In Indonesia, taxpayers can claim up to three dependents for income tax deductions. However, in practice, a household-based tax structure that positions the husband as the primary taxpayer often limits the visibility of women’s financial responsibilities toward their own parents or extended families.
According to Wisnu, this institutional assumption does not fully reflect Indonesia’s social reality. More than 50 million Indonesian women participate in the labor market as employees, informal workers, or entrepreneurs and many contribute significantly to supporting their families of origin. When fiscal rules implicitly assume that dependents follow the male line, women’s economic contributions risk being underrecognized in policy design.
Patriarchy Within Fiscal Institutions
Wisnu further noted that fiscal policies are often considered gender-neutral. In reality, however, their design can shape economic incentives and social norms. International evidence shows that household-based taxation systems can reinforce traditional gender roles by reducing incentives for secondary earners to participate in the labor market or formal financial systems fully.
“Indonesia’s tax reform agenda focuses on improving compliance, expanding the tax base, and strengthening state revenue. However, modernization should not be limited to digital integration and administrative efficiency,” he said.
He emphasized that modernization should also involve re-evaluating how fiscal institutions interact with labor markets, demographic changes, and gender equality. If fiscal frameworks continue to rely on outdated assumptions about household economic roles, patriarchal norms risk being embedded not only in social practices but also in public policy architecture.
Toward a More Inclusive Fiscal Framework
Globally, many countries have gradually shifted toward individual-based taxation systems, recognizing each person as an independent economic actor regardless of marital status. Such systems can enhance transparency, strengthen labor market participation incentives, and support broader financial inclusion.
However, Wisnu stressed that Indonesia does not need to adopt external models fully. Future reforms should carefully assess whether administrative simplification may lead to unintended distributional impacts or institutional bias. A more inclusive fiscal framework would acknowledge the growing economic role of women while maintaining compliance and state revenue stability.
According to Wisnu, taxation is not merely a technical mechanism for collecting state revenue; it also reflects the state’s recognition of individuals’ economic roles and capacities within society. As Indonesian women continue to increase their participation in the labor market and entrepreneurship, fiscal policies must evolve accordingly.
“A modern tax system should pursue not only efficiency, but also fairness and inclusivity,” he concluded.
Reported by: Kurnia Ekaptiningrum
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