Email this article The Distance Between Us: A Preliminary Inquiry into Taxpayers’ Social Distance from Tax Officers in Indonesia
Abstract
The self-assessment system relies on taxpayers’ voluntary compliance. The literature provides that the closer the distance between taxpayers and tax officers is, the more likely taxpayers are to comply. The purpose of this research is to analyse this phenomenon in the Indonesian context, a topic that is not covered extensively in the literature. In doing so, a group of small business owners were asked to complete a questionnaire, the design of which was based on Bogardus’s social distance scale. One group, named Friends of Tax/FoT (UKM Sahabat Pajak/USP), was of particular interest due to its close association with the tax office. The USP members’ social distance score is then compared to that of other taxpayers using both the standard t-test and the Mann-Whitney U test. The results suggest that FoT members are significantly less socially distanced from tax officers than other taxpayers, which explains their close association with the tax office. Further comparison of social distance scores across groups of taxpayers are then made. The findings indicate that those who identify themselves solely as small business owners are significantly less socially distanced from tax officers than those who are also salaried. Other findings include the fact that taxpayers with higher education levels tend to be more socially distanced from tax officers than FoT members. Older taxpayers, on the other hand, often place themselves at similar social distances from tax officers to FoT members. These findings suggest that the Indonesian tax office could improve taxpayer compliance levels by focussing on reducing the social distance between tax officers and taxpayers. This could be accomplished by helping taxpayers to address their business concerns rather than focussing on tax-only campaigns. These programs could be aimed, primarily, at younger business owners, particularly those with higher education levels.
Keywords: Tax, Social Distance, Individual, Small Business, Compliance, Hard To Tax.
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