Trust, power, and tax compliance : evidence from Jakarta, Indonesia

  • Mardhiah Mardhiah

    Student thesis: Doctoral Thesis


    This study is dedicated to examining tax compliance factors associated with trust in and power of tax authorities, as suggested by the Slippery Slope Framework (SSF), drawing lessons from a developing country. Two new tax compliance factors that have not previously been included in the SSF – perception of corruption and perception of tax complexity – were added into the model. Mixed methods research was used through conducting a survey of individual taxpayers, and interviewing both individual taxpayers and tax officers in Jakarta, Indonesia. A partial least squares regression method was used to analyse the survey data, while deductive and thematic approaches were used to analyse the interview data.
    The survey results confirmed that most tax compliance factors used in the model have associations with either trust or power. The two new variables of perception of corruption and perception of tax complexity were generally shown to have significant associations with either trust or power. Perception of corruption and perception of tax complexity had significant and negative associations with trust in tax authorities. On the other hand, perception of corruption had positive and significant associations with the power of tax authorities. However, there was no significant association between the perception of tax complexity and the power of tax authorities.
    The results also confirm that trust leads to voluntary compliance and voluntary compliance positively affects overall tax compliance. However, the study failed to find evidence for the relationship between power and enforced compliance, while enforced compliance was found to negatively affect overall tax compliance. Meanwhile, the interview results provided a deeper understanding of the perceptions of the tax compliance factors discussed and also enabled the exploration of a different perspective on trust and power from the tax officers’ point of view. The interviews yielded many valuable findings to support and explain the survey results. Also, other potential factors that might have associations with trust, power, and tax compliance, but have not been discussed in the SSF, emerged during the interviews.
    This study contributes to the literature as it is perhaps the first to elaborate in detail factors that have associations with trust in and power of tax authorities. The addition of two new variables (perception of corruption and perception of tax complexity) add to the robustness of the study. This study is among only a few studies focused on the Slippery Slope Framework that use a developing country, especially Indonesia, as the country of focus. In terms of contributions to tax practices, this study may assist tax authorities in understanding factors that are believed to increase their power as well as taxpayers’ trust in them. Also, findings suggest that tax authorities need to be cautious in relation to several factors that may reduce this trust and power. Knowing the factors affecting trust in and power of tax authorities is useful in designing policies that accommodate taxpayers’ needs and in improving the performance of tax authorities.
    Date of Award2019
    Original languageEnglish
    SupervisorRiyana Miranti (Supervisor), Mark Evans (Supervisor) & Robert Tanton (Supervisor)

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