Progressive Tax Policy and Lunar New Year: Can Taxes Accommodate Cultural Diversity?
The Lunar New Year celebration, as part of the Chinese identity in Indonesia, is not just a moment of socializing and tradition but is also linked to economic activities such as the distribution of angpao (red envelopes with money), purchasing symbolic goods (oranges, kue keranjang, etc.), and donations to temples. Amidst these dynamics, a question arises: How does progressive tax policy—which is an instrument of social justice—respond to cultural diversity like the Lunar New Year?
Understanding Progressive Tax in the Cultural Context
Progressive tax is a taxation system where the rate increases in line with the taxpayer’s income. In Indonesia, this policy is reflected in the Personal Income Tax (PPh) rates (0-35%). Its noble goal is to reduce social inequality and distribute welfare. However, when it comes to cultural practices such as Lunar New Year, several challenges emerge:
1. Angpao and Tax Obligations
The tradition of giving angpao (red envelopes with money) is often considered a gift or social assistance. However, according to the Income Tax Law (PPh) Article 4, Paragraph 3, gifts in the form of money or goods are taxed if they exceed a certain limit (Rp 10 million per year). For large families that give out significant amounts of angpao, this could potentially lead to an unnoticed tax obligation.
2. Donations to Temples and Tax Deductions
Donations to religious institutions (including temples) should be deductible from taxable income (Article 6, Income Tax Law). However, in practice, only donations to registered institutions with the Ministry of Religious Affairs are recognized. Many temples or Chinese organizations are not officially registered, so public donations cannot be claimed as tax deductions.
3. Consumption of Symbolic Goods and VAT
The increased demand for goods like oranges, red clothing, or kue keranjang during Lunar New Year contributes to VAT revenues. However, does the government consider cultural aspects when imposing VAT on these items? For instance, are there incentives for SMEs producing traditional Lunar New Year goods?
Lunar New Year as a Reflection of Inequality in the Tax System
Although progressive tax aims to be fair, cultural realities are often more complex:
– Double Burden for Middle-Income Families
Chinese families with modest incomes often feel burdened by the obligation to buy symbolic goods or distribute angpao. Meanwhile, the progressive tax they pay is not always accompanied by specific incentives for these cultural practices.
– Lack of Clear Regulations for Cultural Activities
There are no explicit regulations providing tax relief for cultural activities like Lunar New Year celebrations. This contrasts with zakat (charitable giving), which is recognized as a tax deduction (Law No. 23/2011). This raises the impression that the tax system is not fully inclusive of diverse traditions.
– Potential Indirect Discrimination
Progressive tax applies generally, but groups with traditions that involve high expenditures (such as Lunar New Year) may feel “punished” indirectly because their cultural obligations are not accommodated.
Opportunities for Reform: How Can Tax Be More Culturally Sensitive?
To ensure progressive tax policy is not only economically fair but also responsive to culture, several steps could be considered:
1. Tax Incentives for Cultural Activities
The government could provide **special tax deductions** for donations to registered Chinese cultural or religious institutions, similar to zakat.
2. Cultural-Based Tax Education
Increasing taxpayer education on the tax treatment of angpao or Lunar New Year donations is essential, especially through collaboration with the Chinese community.
3. Adjustment of Non-Taxable Gift Limits
Revisiting the non-taxable gift limit (e.g., raising it from Rp 10 million to Rp 20 million per year) to accommodate traditions involving large-scale giving.
4. Pro-Cultural VAT Policy
Providing temporary VAT exemptions for SMEs selling essential Lunar New Year goods, like kue keranjang or traditional candles.
Conclusion: Progressive Tax Should Be a Bridge, Not a Wall
Lunar New Year serves as an important mirror to assess how Indonesia’s fiscal policies honor diversity. The progressive tax system should not just focus on numbers but also on human and cultural values. With the right reforms, tax can be a unifying tool that accommodates traditions while maintaining the principle of social justice.
As a multicultural society, it is time for Indonesia to have a tax policy that not only “takes” but also “protects” cultural heritage. 🏮