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  • P-ISSN2765-6934
  • E-ISSN2765-7027
  • KCI

ISSN : 2765-6934

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Vol.12 No.2

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Analysis of Local Tax Performance Through Tax Capacity and Tax Effort in Indonesia 2014-2018

Asian Journal of Business Environment / Asian Journal of Business Environment, (P)2765-6934; (E)2765-7027
2022, v.12 no.2, pp.43-53
Ali Hadi RAFSANJANI (BPS Statistics Indonesia)
Neli AGUSTINA (Polytechnic of Statistics STIS)
Ali, H. R. , & Neli, A. (2022). Analysis of Local Tax Performance Through Tax Capacity and Tax Effort in Indonesia 2014-2018. Asian Journal of Business Environment, 12(2), 43-53.

Abstract

Purpose: This study aims to analyze the performance of local taxes in Indonesia through the estimation of tax capacity and tax effort, as well as classifying provinces based on the estimated value of tax capacity and tax effort. Research design, data and methodology: this study uses panel data of 34 provinces in Indonesia for the period of 2014-2018. The analytical method used in the tax capacity model is panel data regression to explain the factors that influence tax performance. Tax effort is estimated by the ratio of tax to tax capacity. Results: The results of the analysis show that gini ratio and regional expenditures have a significant positive effect on the tax ratio, while the share of GRDP in the manufacturing sector and HDI has a significant negative effect on the tax ratio. Based on the results, there are 19 provinces that have low tax capacity and 16 provinces that have low tax effort. Conclusions: The development of local tax performance tends to fluctuate with an average of 1.24 percent per year. Gini ratio and regional expenditure have a significant positive effect on the tax ratio, while the share of GRDP in the manufacturing sector and HDI have a significant negative effect on the tax ratio.

keywords
Local Taxes, Panel Data Regression, Tax Capacity in Indonesia, Tax Effort

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