The findings come at a critical time as Indonesia continues adjusting its VAT policy, increasing the rate from 10% to 11% in 2022 and to 12% in 2025. Understanding how people respond to these changes is essential for policymakers, especially in a consumption-driven economy where household spending contributes more than half of the national GDP.
Consumption Trends in a Changing Economic Landscape
Consumer behavior in Indonesia has shifted alongside rapid technological growth and globalization. Digital platforms, online shopping, and aggressive advertising have encouraged more impulsive buying, often beyond basic needs. This trend is particularly visible in the purchase of secondary and tertiary goods such as fashion, electronics, and entertainment.
Within the Cultural Preservation Center Region XVII, researchers observed similar patterns among employees. Despite having stable incomes as civil servants (ASN), many respondents reported impulsive purchases and reliance on installment plans for non-essential goods.
At the same time, rising VAT rates have introduced additional financial considerations into everyday spending decisions, making this research highly relevant to current fiscal policy debates.
Simple Survey, Clear Statistical Approach
The study used a quantitative design based on an online questionnaire distributed to all 68 employees at the institution. Because the population was relatively small, the researchers applied a total sampling method, meaning every employee participated.
Respondents answered structured questions measuring:
- Perceptions of VAT rates
- Consumptive behavior (such as impulsive buying and use of credit)
- Income levels
The data were analyzed using regression techniques, including Moderated Regression Analysis (MRA), to examine both direct effects and the potential moderating role of income.
Key Findings: Tax Perception Drives Behavior
The results clearly show that VAT perception has a negative and statistically significant impact on consumptive behavior.
- Regression coefficient: -0.108
- Significance level: p < 0.05
This means that the stronger individuals perceive VAT as increasing prices or creating a financial burden, the more they reduce their consumption.
In practical terms, when employees believe that VAT makes goods more expensive, they tend to:
- Delay purchases
- Reduce spending on non-essential items
- Become more selective in shopping
This aligns with behavioral economic theories such as Prospect Theory, which explains that people are more sensitive to losses than gains. VAT increases are perceived as a loss, prompting individuals to cut back on spending.
Income Does Not Change the Effect
One of the most notable findings is that income does not moderate the relationship between VAT perception and consumptive behavior.
- Interaction coefficient: 0.029
- Significance: p = 0.502 (> 0.05)
This indicates that regardless of income level, respondents reacted similarly to VAT perceptions.
The reason lies in the homogeneity of income among participants:
- 95.5% of respondents earn below IDR 10 million per month
- All respondents are civil servants with standardized salary structures
Because income differences are minimal, they do not create meaningful variation in consumption behavior. As a result, psychological factors outweigh financial differences.
Psychological Factors Outweigh Economic Variables
The study emphasizes that perception is more influential than actual income in this context.
According to the researchers from Universitas Sam Ratulangi, “the perception of tax burden operates in a cognitive and psychological domain, making its influence consistent across income levels within homogeneous groups.”
This insight highlights three key mechanisms:
1. Psychological dominancePeople respond more to how they perceive taxes than to their actual financial capacity.
2. Income similarity
Limited income variation reduces the impact of economic differences.
3. Group norms
Shared workplace culture and social environment reinforce similar consumption behaviors.
These findings are consistent with previous research showing that in groups with stable and similar incomes, external perceptions—such as tax policies—have a stronger influence than individual financial conditions.
Implications for Policy and Society
The study offers several important implications for policymakers, businesses, and the public:
For businesses, these findings suggest that pricing strategies and consumer messaging should account for how customers perceive tax-related price changes.
Author Profiles
Fransisko Grathio RumagitResearcher in accounting and behavioral finance, Faculty of Economics and Business, Universitas Sam Ratulangi
Dr. Treesje Runtu
Senior lecturer and researcher specializing in taxation and financial policy, Universitas Sam Ratulangi
Priscillia Weku
Academic researcher in accounting and consumer behavior, Universitas Sam Ratulangi
All authors are affiliated with Universitas Sam Ratulangi, Manado, Indonesia.
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