The study, titled “The Paradox of Taxation in Indonesia: High Targets, Low Realization,” was written by Melli Oktarima, Nazwa Khoirunnisa, Reiski Nahdatun Nisha, Mega Metalia, and Ratna Septiyanti from the University of Lampung. Published in the Indonesian Journal of Accounting and Financial Technology (CRYPTO), the research examines why Indonesia repeatedly sets ambitious tax targets but often fails to fully realize them.
The findings arrive at a critical time for Indonesia’s fiscal policy. Tax revenue remains the backbone of the state budget, funding infrastructure, healthcare, education, and public services. However, recurring shortfalls in tax realization continue to challenge the government’s ability to maintain sustainable economic growth and social welfare programs.
According to the researchers, Indonesia’s taxation problem is shaped by a combination of low taxpayer awareness, inconsistent law enforcement, a large informal economic sector, and administrative inefficiencies. The study highlights that raising tax targets alone is insufficient without improving taxpayer behavior and institutional trust.
The researchers explain that many Indonesians still lack comprehensive understanding of taxation rules and obligations. Even when taxpayers are aware of filing and payment procedures, compliance often weakens due to perceptions of unfair enforcement or complicated administrative systems.
The study also points to the broader economic context. Tax targets are frequently determined based on fiscal ambitions rather than realistic economic conditions. During periods of economic uncertainty, businesses and individuals may struggle to fulfill tax obligations, widening the gap between projected and actual revenue.
To examine the issue, the research team used a quantitative explanatory approach involving registered taxpayers with active taxpayer identification numbers (NPWP). Data were collected through structured questionnaires and supported by secondary references from tax-related literature and official reports.
The analysis combined descriptive and inferential statistical methods, including multiple linear regression and path analysis, to identify the relationship between tax knowledge, tax sanctions, taxpayer compliance, and tax revenue realization.
The findings reveal a strong connection between taxpayer behavior and state revenue performance.
Key findings from the study include:
- Tax knowledge positively affects taxpayer compliance with a coefficient value of 0.43.
- Tax sanctions positively influence taxpayer compliance with a coefficient value of 0.30.
- Taxpayer compliance has the strongest effect on tax revenue realization, with a coefficient value of 0.50.
- Tax revenue targets influence realization levels, but the impact is relatively smaller, with a coefficient value of 0.27.
The research indicates that taxpayer compliance is the most decisive factor in improving Indonesia’s tax revenue performance. In other words, ambitious fiscal targets will remain difficult to achieve if public compliance does not improve.
The study found that taxpayers generally possess moderate to good tax knowledge, with respondents scoring an average of 4.10 on the survey scale. However, compliance levels remain inconsistent, particularly regarding punctual reporting and payment obligations.
Perceptions of tax sanctions also played a major role. Respondents who believed penalties were consistently enforced were more likely to comply with tax regulations. The researchers noted that sanctions become effective only when taxpayers perceive the legal system as fair and predictable.
Beyond individual behavior, the study highlights structural challenges in Indonesia’s taxation system. A large portion of economic activity still occurs in the informal sector, limiting the government’s ability to expand the tax base. Administrative complexity and bureaucratic inefficiency further discourage compliance among some taxpayers and businesses.
The researchers argue that modernization of tax administration could significantly improve compliance rates. Digital taxation systems, simplified reporting procedures, and clearer communication strategies may help reduce barriers for taxpayers while increasing trust in the system.
The findings also raise questions about Indonesia’s long-term fiscal strategy. While tax incentives are often introduced to stimulate economic growth, excessive incentives may reduce potential state revenue if not carefully balanced with fiscal sustainability.
According to the authors from the University of Lampung, public education remains one of the most effective tools for strengthening the taxation system. Increasing taxpayer literacy can help citizens better understand how tax revenue contributes to public infrastructure and national development.
The study ethically paraphrases earlier behavioral taxation theories, including work cited from Wardani’s fiscal psychology framework, which suggests that social influence, personal attitudes, and perceived ease of compliance strongly affect taxpayer behavior. The University of Lampung researchers build on this perspective by showing that compliance improves when taxpayers feel informed, fairly treated, and legally protected.
For policymakers, the study offers a practical message: improving tax revenue requires more than increasing annual targets. Governments must also strengthen administrative systems, improve transparency, enforce sanctions consistently, and expand taxpayer education.
For businesses, the findings reinforce the importance of regulatory certainty and efficient tax services. A predictable taxation environment may encourage higher compliance while reducing operational uncertainty for companies and entrepreneurs.
The research may also have implications for Indonesia’s broader economic resilience. Higher tax compliance can increase state revenue stability, reduce dependence on debt financing, and strengthen the government’s ability to fund public programs during economic downturns.
As Indonesia continues pursuing fiscal reform and digital transformation, the study from the University of Lampung provides evidence that taxpayer trust and behavioral factors are central to the success of future tax policy.
Author Profile
Melli Oktarima is a researcher and academic affiliated with University of Lampung. Her research focuses on taxation, accounting, fiscal policy, and public financial management. The study was co-authored with Nazwa Khoirunnisa, Reiski Nahdatun Nisha, Mega Metalia, and Ratna Septiyanti, who are also affiliated with the same university.
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