Matitaputty, Shandy Jannifer and Hastuti, Rini (2016) The Importance of Nurturing Ethical Belief to Comply with Tax. The Importance of Nurturing Ethical Belief to Comply with Tax.

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Abstract

It is very important to have compliance of the tax payers for countries which depend the budget primary on tax revenue. Self assessment system (SAS) that is imposed since 1983 in Indonesia require tax payers to understand briefl y how to calculate, pay, and report their own income tax payable. Some previous studies have found that tax understanding influence tax compliance of tax payers regardless the level of understanding. Waples and Darayseh (2009) used ethical approach to analyze tax practices, instead of tax understanding, they emphasized the importance of ethical values learning to fulfill tax obligation. Taxation Department of Faculty of Economics and Business conducts high education in taxation. It produces professionals to support the government runs self assessment system. It also equips students with professional ethics as one of the courses to nurture ethical value on student as potential tax payer and tax professional. We have developed individual income case to be tested on students which have and have not taken professional ethics course to find whether they have different tax compliance. Does professional ethics course strengthen tax compliance or it is solely tax payer’s ethical belief influences tax compliance? Taxation Program of high education can take benefit whether their professional ethics course can elevate student’s ethical belief. Therefore we can develop the best way to learn professional ethics on high education level. 68 students of Taxation Department were selected to be classified into two groups; one group was students that had taken professional ethics while the other had not. Firstly, they were tested with some ethical dilemma cases to seek their level of ethical belief on average. Secondly, they were given an income tax case to accordingly determine individual tax payable; this was to investigate how their level of tax compliance was. Thirdly, a reward was given if they can minimize tax payable by not reporting certain revenues or by adding engineered expendable expenses. Partial regression was used to measure how individual ethical belief and having professional ethics course influence tax compliance; while simultant regression was also used to investigate how the two variables influence tax compliance.T-test was also used to differentiate individual ethical belief and tax compliance between the groups. The Regression test showed that the two variables were significantly influence tax compliance, It was proven that ethical value of tax payers influenced their tax compliance, as well as taking the professional ethics course. T-test showed that tax compliance between the groups was not different. It could be inferred that by having the course would not change their tax compliance. Class method might be improved to elevate the level of tax compliance. Measuring the level of compliance was to be the limitation of the research in order to precisely determine best professional ethics class method.

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