Tax Literacy and Better Services Drive Land and Building Tax Compliance, Review Finds
Public awareness remains the strongest driver of compliance with Land and Building Tax (PBB/PBB-P2), according to a 2026 systematic literature review conducted by Putri Maysaroh, Nadia Mulatsih, Ajeng Rahayu Ningroem, Mega Metalia, and Ratna Septiyanti from the Diploma III Taxation Program, Faculty of Economics and Business, Universitas Lampung, Indonesia. Published in the Indonesian Journal of Contemporary Multidisciplinary Research (MODERN), the study concludes that sustained tax education, accessible public services, and clear communication are more effective in encouraging voluntary tax compliance than relying primarily on penalties or incentives.
The findings come at a time when governments around the world are seeking more sustainable ways to improve tax compliance without increasing enforcement costs. Property taxes are a major source of local government revenue, financing public infrastructure, education, health services, and community development. Yet many regions continue to experience low compliance rates, often because taxpayers have limited understanding of tax obligations or lack confidence in public institutions.
Rather than viewing tax compliance solely as a legal obligation, the researchers argue that it should also be understood as a matter of public awareness, trust, and effective communication. Their review suggests that citizens are more likely to pay taxes voluntarily when they understand how taxes contribute to public welfare and when tax systems are transparent, accessible, and user-friendly.
To provide a comprehensive perspective, the research team conducted a descriptive qualitative literature review of nine peer-reviewed studies examining Land and Building Tax (PBB) and Rural and Urban Land and Building Tax (PBB-P2). The selected studies were published between 2016 and 2025 and focused on factors influencing taxpayer awareness and compliance across different regions of Indonesia.
The researchers systematically identified, screened, compared, and synthesized evidence from previous studies rather than collecting new field data. This approach enabled them to identify recurring patterns while also highlighting differences across local contexts.
The review found that public awareness consistently emerged as the central factor influencing tax compliance. Rather than functioning independently, awareness develops through interactions among educational, administrative, psychological, and institutional factors.
Three factors appeared most consistently across the reviewed studies:
- Tax education and socialization improve public understanding of tax obligations, payment procedures, and the broader benefits of taxation.
- Tax literacy enables citizens to better understand tax regulations, deadlines, and administrative requirements, reducing confusion and unintentional non-compliance.
- High-quality tax services create positive experiences that strengthen public trust and make compliance easier through clear communication, responsive assistance, and accessible services.
The researchers found that these three elements reinforce one another. Citizens who receive understandable tax information and efficient public services are more likely to develop lasting awareness and voluntarily fulfill their tax obligations.
The review also examined several additional factors that influence compliance but found that their effects vary depending on local conditions.
Tax penalties may encourage compliance in some regions, particularly when taxpayers already understand tax regulations and trust government institutions. However, penalties alone rarely create long-term awareness if taxpayers lack adequate information.
Similarly, tax incentives, household income, and public trust in government showed context-dependent effects. Some previous studies reported significant relationships between these variables and tax compliance, while others found limited or no direct influence. These differences suggest that local economic conditions, administrative capacity, and community perceptions all shape taxpayer behavior.
One of the review's key contributions is its integrated perspective. Previous research often investigated awareness, tax knowledge, service quality, penalties, or public trust separately. By synthesizing evidence from multiple studies, Putri Maysaroh and colleagues at Universitas Lampung demonstrate that effective tax compliance strategies require these factors to work together rather than in isolation.
The authors ethically conclude that strengthening public awareness should become the foundation of local tax policy. Their synthesis indicates that continuous education, effective communication, accessible tax services, and institutional trust collectively encourage voluntary compliance more effectively than enforcement measures alone.
The findings also carry practical implications for governments pursuing digital transformation in public administration. As tax systems increasingly adopt online services, improving tax literacy becomes just as important as expanding digital infrastructure. Citizens must understand both why taxes matter and how to fulfill their obligations through modern service platforms.
For local governments, the review recommends continuous tax outreach programs that present tax information in simple and accessible language. Public services should also become faster, more responsive, and increasingly supported by digital technology to reduce administrative barriers.
Educational institutions may use these findings to strengthen financial and civic education programs that promote tax awareness from an early age. Meanwhile, policymakers can apply the integrated framework proposed in the review when designing public communication campaigns that prioritize understanding, transparency, and trust instead of relying primarily on penalties.
The researchers acknowledge that their study is based entirely on previously published literature rather than original field research. They therefore recommend future studies involving quantitative surveys, regional case studies, and comparative analyses to validate the proposed framework across different socioeconomic and administrative contexts.
Overall, the review reinforces an increasingly important principle in public finance: sustainable tax compliance is built through informed citizens, trustworthy institutions, and effective public services. By positioning tax literacy and public awareness at the center of compliance strategies, the study offers practical guidance for improving local tax collection while strengthening the relationship between governments and taxpayers.
Author Profile
Putri Maysaroh is a researcher in the Diploma III Taxation Program, Faculty of Economics and Business, Universitas Lampung, specializing in taxation, public finance, and tax compliance. This study was co-authored by Nadia Mulatsih, Ajeng Rahayu Ningroem, Mega Metalia, and Ratna Septiyanti, all affiliated with Universitas Lampung, whose research interests include taxation, public administration, and fiscal policy.
Source
- Maysaroh, P., Mulatsih, N., Ningroem, A. R., Metalia, M., & Septiyanti, R. (2026). Smart-Tax Evolution: Tax Literacy Innovation to Encourage Land and Building Tax Compliance. Indonesian Journal of Contemporary Multidisciplinary Research (MODERN), Vol. 5, No. 3, pp. 451–464.
- DOI: https://doi.org/10.55927/modern.v5i3.43
- URL Jurnal: https://journal.formosapublisher.org/index.php/modern
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