ISSN: 1368-5201
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Journal of Money Laundering Control: Volume 23 Issue 1
Table Of Contents
Sigma ratings: adapting the credit rating agency model for the anti-money laundering world
Daniel CashDisclosing anti-money launderers through CSR regulation – a new way to combat money laundering
Kalle Johannes Rose
The agency dilemma in anti-money laundering regulation
Mohammed Ahmad NaheemDoes corruption adversely affect economic growth in Tunisia? ARDL approach
Anas Al Qudah, Azzouz Zouaoui, Mostafa E. AboelsoudGlobal knowledge management of suspicious transaction reporting system in Japan
Noriaki YasakaBalancing anti-money laundering measures and financial inclusion: The example of the United Kingdom and Nigeria
Ehi Eric Esoimeme
Corruption and anti-corruption strategies in Iran: An overview of the preventive, detective and punitive measures
Habeeb Abdulrauf Salihu, Amin Jafari
Money-laundering and terrorism-financing compliance – unsolved issues
Fabian Maximilian Johannes TeichmannCustomer identification in currency exchange companies as per FATF recommendations
Joel Harry Clavijo SunturaResponse to money laundering scandal: evidence-informed or perception-driven?
Ronald F. Pol
Banks’ vulnerabilities to money laundering activities
Peter YeohImplementation of investigation by the Indonesian national police in eradicating corruption crime
Armunanto Hutahaean, Erlyn Indarti
State and institutional capacity in combating money laundering and terrorism financing in armed conflict: The Central Bank of Syria
Ebrahim M.R. Lababidi
Detecting money laundering transactions with machine learning
Martin Jullum, Anders Løland, Ragnar Bang Huseby, Geir Ånonsen, Johannes Lorentzen
The necessity of anti-money laundering standards for Iranian auditors
Mahdi Salehi, Vahid Molla Imeny, Ahmad Khaleghi Baygi
Independence and temporality: examining the PMLA in India
Sameer SharmaHawala as credit: recognizing how hawala supports the business climate in Afghanistan
Haroun RahimiInfluence of justice, culture and love of money towards ethical perception on tax evasion with gender as moderating variable
Dodik Ariyanto, Gusti Ayu Putu Weni Andayani, I. Gusti Ayu Made Asri Dwija Putri
Combating corruption in the Nigerian Civil Service: An empirical assessment of treasury single account (TSA) policy
Habeeb Abdulrauf Salihu
In fl uence of justice, culture and love of money towards ethical perception on tax evasion with gender as moderating variable
Dodik Ariyanto
Department of Accounting, Udayana University, Denpasar, Indonesia, and
Gusti Ayu Putu Weni Andayani and I. Gusti Ayu Made Asri Dwija Putri
Department of Accounting, Faculty of Economics and Business, Udayana University, Denpasar, Indonesia and Bukit Campus, Jl.
Unud Jimbaran Raya Campus, South Kuta District, Badung Regency, Bali
Abstract
Purpose–The purpose of this study is to evaluate the influence of justice, culture and love of money on ethical perceptions about tax evasion. As well as gender will strengthen the influence of justice, culture and love of money on ethical perceptions about tax evasion.
Design/methodology/approach– The primary data were collected and analyzed using a popular component-based model called partial least square (PLS). PLS consists of two sub-models, measurement model or outer model and structural model or inner model. The measurement model shows how real or observable variables are latent variables to be measured. While the structural model shows the level of estimation between latent or construct variables.
Findings–The statistical analysis showed that neither the coefficient of gender (moderating variable) nor the interaction between gender and the exogenous variable are significant. Solimun (2010) explained that such moderating variable is called homologizer moderation (potential moderation). Homologizer moderation refers to variable that may potentially become a moderating variable influencing relationship between predictor (exogenous) and dependant variable (endogenous). This variable has no interaction with predictors or can be said to be insignificant on the dependent variable. In this study, gender is a potential moderating variable (homologizer moderation). Gender can potentially become a moderating variable influencing relationship between justice, culture and love of money and ethical perception on tax evasion. Gender does not have interaction with justice, culture and love of money or significant influence toward ethical perception on tax evasion.
Originality/value–There are very few studies on tax evasion from an ethical point of view so this study is not only important but also interesting because it shows that tax evasion is a classic problem taking place in nearly all countries that apply taxation system; cultural difference results in different views on ethical perceptions on tax evasion (Basri, 2015); this study uses the local wisdom of Balinese people, namely,Tri Hita Karanaand thus, this study becomes relatively new; justice is one of the non- economic variables of tax compliance behavior (Darmawan, 2012), so that the researcher is interested in conducting further research on the effect of justice toward ethical perception on tax evasion; there are very few studies discussing love of money (Hniszet al., 2013); therefore, research on the effect of love of money toward ethical perception on tax evasion is of necessity and thefindings of previous studies that are inconsistent. The researcher predicted that there are contingency factors that influence the relationship between justice, culture and love of money toward ethical perceptions on tax evasion. As suggested by Baridwan (2012), gender, the moderating variable in this study, refers to masculine and feminine character as a dimension of social culture; this study is carried out in the Tax Service Office (KPP Pratama) of Badung Utara because during the 2015 tax year, KPP Pratama
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Journal of Money Laundering Control Vol. 23 No. 1, 2020 pp. 245-266
© Emerald Publishing Limited 1368-5201 DOI10.1108/JMLC-06-2019-0047
The current issue and full text archive of this journal is available on Emerald Insight at:
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Badung Utara was one of the KPPs in Bali DGT Regional Office which experienced a decline in realization of revenues and a sharp decline in growth.
Keywords Tax evasion, Ethical perception, Influence of justice, Self-assessment system, Taxation law, Directorate general of taxes
Paper typeResearch paper
1. Background
Tax is a type of state revenue used for development and governmentfinancing. Between 2010 and 2015, tax had more than 70 per cent contribution toward the State Budget; the percentage shows that revenue from the taxation sector plays an important role compared to other sources of state revenue. An important aspect of tax revenue is to increase taxpayer compliance. Taxpayer compliance is central to the taxation system because Indonesia applies self-assessment system.
Self-assessment system is a tax collection system that authorizes taxpayers to determine amount of tax payable each year in accordance with the applicable tax laws (Resmi, 2014, p. 11). The logical consequence of self-assessment system is to give full trust to taxpayers to calculate, deposit and report their taxes. Tax authority is responsible for guiding and supervising implementation of tax obligations from taxpayers under the Taxation Law.
Self-assessment system has been implemented in Indonesia since 1983 and having been implemented for three decades, the system does not seem to have shown encouraging result.
Indonesia’s tax ratio between 2012 and 2014 is only 11.9 per cent, much lower when compared to Singapore (14 per cent), the Philippines (12.9 per cent), Thailand (16.5 per cent) and Malaysia (16.1 per cent) (World Bank, 2014). Data obtained from the Ministry of Finance shows that the realization of national tax revenues from 2011 to 2015 has not met its estimated target.Table I shows target and realization of national tax revenues between 2011 and 2015.
Low tax ratio and the fact that the realization of national tax revenue has not its estimated target indicated that that the government, more particularly the Directorate General of Taxes (DGT), should generate higher tax revenues for national development acceleration.
Tax payers are trying to minimize their tax payments through various type of tax resistance because taxes have coercion element. According toKirchleret al.(2003), tax avoidance and tax evasion are examples of active resistance to taxes. Tax avoidance leads to attempt to reduce taxes legally by looking for loopholes or weaknesses of the Taxation Law, while tax evasion leads to attempt to reduce taxes illegally by involving fraud, concealment, or omitting records (Fisher, 2014).
Tax evasion has occurred in Indonesia. As an example is tax evasion carried out in 2007 by PT Asian Agri Group (AAG) and its 14 subsidiaries. They had 1,259 trillion rupiahs tax evasion for over four years and therefore, werefined 2.5 trillion rupiahs (Aidin, 2013). In 2008, PT Metropolitan and three Bakrie Group companies, namely PT Arutmin, PT Kaltim Prima Coal, and PT Bumi Resource, carried out tax evasion and bribed Gayus Tambunan, a
Table I.
Target and realization of tax revenue in Indonesia between 2011 and 2015
Year Target (Trillion of Rupiahs) Realization (Trillion of Rupiahs) (%)
2011 878.65 873.82 99.45
2012 1.011.70 980.17 96.88
2013 1.139.32 1,040.32 91.31
2014 1.246.10 1,143.30 91.75
2015 1.294.25 1,055.00 81.50
Source:www.kemenkeu.go.iddata processing in 2016
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tax officer. In 2014, BCA conducted tax evasion case in 2014 (Siregar, 2014). DGT noted a lot of tax evasion practices committed by taxpayers throughout 2014, which is indicated in a 280 per cent increase in the number of tax evasion cases compared to 2013. Director of Intelligence and Investigation of the Directorate General of Taxes reported that in they handled 42 tax evasion cases in 2014, but only 15 in 2013. The amount of potential state loss due to these cases reached 266.9 billion rupiahs.
Taxpayer disobedient behavior is significantly influenced by several variables, namely attitude, subjective norms, moral obligations, and perceived behavioral controls (Bobek and Hatfield, 2003).
Mustikasari (2007)stated that the Theory of Planned Behavior can explain behavior of taxpayers in fulfilling their tax obligations. Before doing something, an individual has confidence in result of his or her behavior and then he or she will decide whether or not to take the action.
Most studies on tax evasion are only discussing technical aspects of tax evasion, such as legal aspects and techniques of tax evasion. Tax evasion ethic is still rarely discussed. The studies on tax evasion from ethical point of view began with Crowe (1944) and was developed later more deeply byMcGee (2006). Ethical judgment or unethical tax evasion on moral grounds can be evaluated from the tax system, tax rates, fairness, government corruption, compensation received for tax payments, and possible tax evasion detected by tax authorities (McGee and Guo, 2007; McGee and MZali, 2007; McGee and Preobragenskaya, 2008;McGee and Smith, 2007;McGee and Cohn, 2006).
Another study conducted byBeardet al.(2009)discussed the dimension of the ethical scale related to tax evasion. This research concluded that tax evasion was considered as ethical when the tax system was perceived as unfair, the tax money collected was wasted and the government discriminated against several segments of the population. The description above explains the different perspectives on tax evasion. Different cultures, religions and justice perspectives have an influence on one’s ethical views on tax evasion (Beardet al., 2009).
According to Darmawan (2012), justice is one of the non-economic key variables of tax compliance behavior.McGee and Bernal (2006)examined the opinions of economic students in Poland and theirfindings indicated that tax evasion can be justified when the tax system is considered unfair or the government is considered corrupt. McGee and Tarangelo (2008) conducted a comparative study in the USA and Hong Kong and found that under certain conditions such as when the government was corrupt or when the tax system was unfair, tax evasion could be accepted ethically. Research conducted bySuminarsasi and Supriyadi (2012) and Ningsih and Devy Pusposari (2015) showed different results, which is justice did not influence tax evasion ethics.
Tsuiet al.(2007)defined behavior in cross national culture as a study of individual behavior and organizations where national cultural characteristics play a major role as independent variables or moderation. According toOkeet al.(1989)various cultures develop a context and interpretation of events that can influence people’s attitudes toward tax evasion. Various cultural variations show certain behavioral values and norms which are expressed to interpret individual attitude or how his or her daily social relations affect tax fraud. Previous studies found diversity in tax avoidance occurred because of patterns in different cultural contexts.
McGee and Smith (2007)’s study discussing cultural differences regarding ethical perceptions on tax evasion showed that younger people in the United Kingdom, United States and France tend to be less ethical compared to older ones, whereas in Austria younger people tend to be more ethical than the older ones. Alm and Torgler (2006) stated that cultural differences across countries have an important role that determines individual attitudes toward willingness to pay taxes and cultural differences also showed significant consequences of differences in tax morality. Furthermore,McGee and Benk (2011)’s study stated that different demographics affect perception of an individual on tax evasion and this
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may be caused by differences in cultural dimensions.Basri (2015)postulated that cultural dimension influences tax fraud.
Tri Hita Karana(THK) is local wisdom which has become a cultural identity for Balinese people in various sectors (Sulistyawati, 2000). The objective of THK is to achieve happiness by prioritizing the principles of togetherness, harmony and a balance between economic motives, environmental preservation, culture, esthetics, and spirituality (Ariyanto, 2014).
Windia and Dewi (2007)described THK as culture of Balinese society which consists of elements called parahyangan (harmonious relationship between human and God), pawongan(harmonious relationship between human being) and palemahan(harmonious relationship between human and the environment).
Agustian (2005)explained that social resilience is not only synergy between human being or between countries, but also between human and God.Ariyantoet al.(2014a,2014b) stated THK, local wisdom grows and develops in Bali, has a broader scope because in addition to considering relationship between human being and human relations, human and nature, THK also considered relationship between human and God. THK emphasized on balance which states that society tends to view themselves and their environment as a system controlled by equilibrium values and manifested in the form of behavior (Gunawan, 2009). Related to the concept of taxation, the three dimensions of THK can prevent tax evasion. THK guides taxpayer attitudes and behavior and encourages them to maintain integrity, gratitude to God, honesty, caring and willingness to sacrifice for the sake of the state and common interests.
Money is another factor that influences ethical perception of an individual on tax evasion.Tang (1992)introduced the concept of love of money for psychological literature; it means one’s subjective feeling about money.Tang (2002)’s study showed that individual money ethics or love of money has a significant and direct influence toward unethical behavior. This means that people with high ethical behavior of money and placing great interests in money will be less ethical than people with low money ethics.Hniszet al.(2013) reported that there is a positive relationship between money and tax fraud.Luna-Arocas and Tang (2004)andLiu and Tang (2011)’s studies resulted in differentfindings. According to Luna-Arocas and Tang (2004), love of money can help predict and control unethical behavior since individual love of money can predict job satisfaction and possibility of unethical behavior. As an addition,Liu and Tang (2011)stated that there is a significant relationship between love of money and motivation to serve the public and job satisfaction.
Thefindings of these studies are inconsistent to the previous study. The researchers suspected that there are contingency factors that influence the relationship between justice, culture, and love of money and ethical perceptions on tax evasion.Murray (1990)explained that in, order to reconcile conflicting results, a contingency approach is needed to identify other variables that act as moderators in the research model. Studies have proven that conditional factors can moderate the relationship between the independent variable and the dependent variable. There are four classifications of conditional factors, namely: culture, organizational, interpersonal, and individual (Brownell, 1982). Gender becomes a moderating variable in this study. Based onBaridwan’s (2012)suggestion, in this study, gender does not refer to the biological concepts of sex, namely men and women, but rather it emphasizes on the role of individuals in the society with masculine and feminine concepts as a dimension of social culture
The researcher’s motivations to conduct this study are as following:
There are very few studies on tax evasion from an ethical point of view so that this study is not only important but also interesting because it shows that tax evasion is a classic problem taking place in nearly all countries that apply taxation system.
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Cultural difference results in different views on ethical perceptions on tax evasion (Basri, 2015); this study uses the local wisdom of Balinese people, namely THK and thus, this study becomes relatively new.
Justice is one of the non-economic variables of tax compliance behavior (Darmawan, 2012), so that the researcher is interested in conducting further research on the effect of justice toward ethical perception on tax evasion.
There are very few studies discussing love of money (Hniszet al., 2013); therefore, research on the effect of love of money toward ethical perception on tax evasion is of necessity.
Thefindings of previous studies that are inconsistent. The researcher predicted that there are contingency factors that influence the relationship between justice, culture, and love of money toward ethical perceptions on tax evasion. As suggested by Baridwan (2012), gender, the moderating variable in this study, refers to masculine and feminine character as a dimension of social culture.
This study is carried out in the Tax Service Office (KPPPratama) of Badung Utara because during the 2015 tax year, KPP Pratama Badung Utara was one of the KPPs in Bali DGT Regional Office which experienced a decline in realization of revenues and a sharp decline in growth.
Based on the phenomena, theories and previous studies, the researcher is motivated to investigate“The Effect of Justice, Culture, and Love of Money toward Ethical Perceptions on Tax Evasion with Gender as Moderating Variable”.
Based on the background, the objectives of the study is to evaluate influence of justice, culture and love of money towards ethical perception on tax evasion and gender reinforces the influence of justice, culture and love of money toward ethical perception on tax evasion.
2. Theoretical framework
Theoretical framework refers to abstraction and synthesis of theories from literature review that is related to topics of discussion or research problems. Based on the theories, the researcher is then analyzed critically and systematically to produce a synthesis about relationship between variables in the study. This study used Theory of Legal Behavior (TPB) to explain phenomena that influence taxpayers’ethical perceptions on tax evasion.
TBB shows that human actions are directed by three types of beliefs, namely behavioral beliefs, normative beliefs, and control beliefs. Before an individual takes an action, an individual will have confidence about the results of his or her behavior and then decide that he or she will take the action or not.
Based on both the theoretical and empirical studies, the researcher develops problem or topics to study and hypotheses based on the underlying theory and the previous studies.
Hypothesis testing is conducted based on data analysis. Based on results of the analysis, the researcher draws conclusion to confirm the theory and previous empirical research and then make suggestions for further studies.Figure 1described theoretical concept of this study.
2.1 Influence on justice toward ethical perception on tax evasion
TPB is relevant to explain tax payer behavior in fulfilling their tax obligation (Mustikasari, 2007;Bobek and Hatfield, 2003). TPB shows human behavior is directed based on three types of beliefs, namely behavioral belief, normative beliefs and control beliefs. In this context, justice is related to behavioral belief. Behavioral belief refers to individual belief on
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outcome of a behavior (beliefs strength) and evaluation on the outcome (outcome evaluation) is called attitude toward behavior.
The principle of justice is related to the principle of equality which stated that tax collection must befinal, fair and equitable (Adams, 1965). Justice is individual’s perception on the tax system. Taxes are charged fairly to taxpayers in proportion to their ability to pay based on taxable income (Smith, 1937). When taxpayer does not feel that amount of tax they have to pay is unfair, it will affect their intention to behave in a non-compliant manner. If the tax paid and public services provided by the government are considered fair and equitable, then taxpayer tends to comply with the Tax Law and this has a positive effect toward tax compliance (Feld and Frey, 2002;Torgleret al., 2008).
McGee and Bernal (2006)investigated the opinion of economic students in Poland and their findings indicated that when tax system is considered unfair or government is considered corrupt, tax fraud is justified. McGee and Tarangelo (2008) conducted comparative studies in the US and Hong Kong and found that under certain conditions such as when government was corrupt or when tax system was unfair, tax fraud could be accepted ethically. Some previous researchers indicated that justice had a negative and significant influence toward ethical perceptions on tax evasion. Such studies are conducted byChuet al.(2007),Beardet al.(2009),Permatasari and Laksito (2013),Basri and Surya (2014)andAnnisa’ul Handayani and Cahyonowati (2014). Based on the explanation above, thefirst hypothesis is as follows:
H1. Justice has negative influence toward ethical perception on tax evasion.
2.2 Influence of culture toward ethical perception on tax evasion
Mustikasari (2007)stated that TPB is relevant to explain taxpayer behavior in fulfilling their tax obligations. In this study, culture refers to normative beliefs and control beliefs.
Okeet al.(1989)explained that culture develop context and interpretation of events that can influence people’s attitudes toward tax evasion.McGee and Benk (2011)’s study reported that demographic factors influence people’s perceptions on evasion and it can be caused by different cultural dimensions. In addition,Basri (2015)’s study also showed that cultural dimension influences tax fraud.
Hofstede’s cultural dimension emphasizes on human aspect only. The cultural dimension used in this study is THK because THK that grows and develops in Bali has a broader scope. It discusses relationship between human being, relationship between human being and nature and one between human being and God (Ariyanto et al., 2014a,2014b) THK’s cultural dimension emphasizes on three causes of happiness which are interpreted as three causes of welfare; they stem from harmonious relationship between human and God
Figure 1.
Theoretical concept of the study
Justice
Love of Money
Ethical perception on tax evasion
Gender H1
H2 H3
H5 Culture
H6 H7
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(parahyangan), human and environment (palemahan), and relationship between human being (pawongan) (Kaler, 1983;Surpha, 1991;Pitana, 1994;Dalem, 2007;Palguna, 2007; and Agung, 2009).
Parahyanganis maintaining a harmonious relationship between human and God. Its dimensions explained success depends upon not only human ability and hard work but also God’s blessing (Wadong and Putra, 2000). Associated to taxes,parahyanganis moral driver that represents one’s willingness to pay taxes sincerely without any coercion as a sense of gratitude and manifestation of his devotion to God.
Pawonganis maintaining a harmonious relationship between human being.Pitana (2002) explainedpawonganmeans that an individual cannot live alone without help from others and therefore, he or she needs to maintain harmonious relations with others including the government. With regard to taxes, the concept ofPawonganencourages individuals to care about public interest; instead of a burden, tax is a joint-obligation to improve national development related to increasing shared interests.
Palemahan is maintaining harmonious relationship between human being and their environment. Its dimensions are related to physical aspects around us. Palemahan encourages an individual to distribute some percentages of his or her income to support activities related to the environment as a manifestation of his or her social responsibility.
Regarding to taxes, encouraging and individual palpitation to pay taxes because axes finance public facilities.
The concept ofparahyanganin TPB is related to control beliefs, namely beliefs about the existence of elements that support or inhibit behavior and perceptions of how strongly these elements support and inhibit behavior. The concepts ofpawonganandpalemahanin TPB are related to normative beliefs namely beliefs about other people’s normative expectations and motivation to fulfill those expectations. Balanced relationship between human and God (parahyangan), between human being (pawongan), and between human being and environment (palemahan) will encourage a person to avoid negative behavior (Agung, 2009).
THK can be applied in various aspects of life, including taxation. THK is considered to be able to guide taxpayers’attitude and behavior to maintain integrity through gratitude to God, honesty, caring and willingness to sacrifice for the sake of one’s country and public interest and to avoid unethical behavior. Based on the explanation, the second hypothesis is as follows:
H2. Culture has negative influence toward ethical perception on tax evasion.
2.3 Influence of love of money toward ethical perception on tax evasion
TPB is relevant to explain taxpayer behavior in fulfilling their tax obligation (Mustikasari, 2007). TPB shows that human behavior is affected by three types of beliefs, namely, behavioral beliefs, normative beliefs, and control beliefs. In this context, love of money is related to behavioral beliefs. Money is very important in relation to individual attitudes that can be seen through several variables, namely personality, biography and attitude (Mitchell and Mickel, 1999).Tang (1992)introduced the concept of love of money that measures one’s subjective feeling about money.
High money ethics is also called love of money, which applied when an individual places a great interest in money and thinks money is everything in his or her life. An individual with high money ethics will be less ethical than people with low money ethics.Tang and Chiu (2003)argued that love of money is closely related to greed. They found that Hong Kong employees with a higher level of love for money were less satisfied with their work
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compared to their colleagues. Furthermore,Chen and Tang (2006)stated that this can lead to unethical behavior.
Love of money has significant and direct influence on unethical behavior. It means that higher level of love of money equals to lower ethical perception and vice versa (Tang, 2002;
Tang and Chiu, 2003;Tanget al., 2008;Elias, 2010;Yeltsinta and Fuad, 2013;Pradanti and Prastiwi, 2014).Hniszet al.(2013)conducted a study discussing how much influence money ethics have towards ethical perception on tax evasion among accounting students in Malaysia. Thefindings showed that there is a positive relationship between money ethics and ethical perception on tax evasion. The higher the level of the money ethics is, the more likely it is for accounting students to consider tax evasion ethical. Other research showed that the higher the nature of love of money is, the higher ethical perception on tax evasion is (Basri, 2014;Rosianti and Mangoting, 2014;Basri, 2015). Based on the explanation above, the third hypothesis is as follows:
H3. Love of money has positive influence toward ethical perception on tax evasion.
2.4 Influence of justice toward ethical perception on tax evasion with gender as moderating variable
Mustikasari (2007) postulated that TPB is relevant to explain taxpayer’s behavior in fulfilling their tax obligations. TPB shows that human actions are caused by three types of beliefs, namely behavioral beliefs, normative beliefs and control beliefs. Justice, in this study, is related to behavioral beliefs.Chuet al.(2007),Beardet al.(2009), andAnnisa’ul Handayani and Cahyonowati (2014)’s study showed that justice has a negative and significant influence toward ethical perceptions on tax evasion. However, some studies reported that justice does not have influence toward ethical perception on tax evasion (Suminarsasi and Supriyadi, 2012;Ardyaksa and Kiswanto, 2014; Ningsih and Devy Pusposari, 2015).
It is predicted that moderating variable may cause inconsistentfindings among studies discussing influence of justice toward tax evasion. Moderating variable in this study is gender. Gender is considered as a moderating variable in this study because it emphasizes on values between masculine and feminine. Masculine culture tends to put a greater emphasis on wealth, competence and performance while feminine culture puts a greater emphasis on equality, solidarity and quality of life (Putri, 2011).
In high masculine countries, people increase their ego, wealth and recognition to succeed (Hofstede, 1980).Husted (1999)claimed that such country is prone to corruption because they are focusing too much on wealth. Furthermore,Husted (1999)stated that there is a positive relationship between masculinity and corruption. Therefore, countries with high masculinity are more prone to tax evasion. Femininity is represented by caring for others, attention toward environment and tendency to opt for negotiation rather than hierarchical power for problem-solving (Hofstede, 2001b) and thus, countries with high femininity tends to avoid tax evasion. Based on the explanation above, the fourth hypothesis is as follows:
H4. Gender reinforces influence of justice toward ethical perception on tax evasion.
2.5 Influence of culture toward ethical perception on tax evasion with gender as moderating variable
The theory of gender role stated that boys and girls learn about behavior and attitude from their family, a place where they grow and thus, understanding about the role of gender is the
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result of socialization. Burke (2000) stated that gender identity refers to how an individual identified him or herself, whether or not he or she is masculine or feminine. Masculine culture tends to put a greater emphasis on wealth, competence and performance while feminine culture puts a greater emphasis on equality, solidarity and quality of life (Putri, 2011).
TPB shows that human actions are caused by three types of beliefs, namely behavioral beliefs, normative beliefs and control beliefs. Based on the context of this study, THK is closely related to normative beliefs and control beliefs. Two concepts in THK, relationship between human being and the environment (palemahan) and relationship between human being (pawongan), are closely related to femininity (Dina et al., 2012). Harmonious relationship between human being and the environment and relationship among human being in Balinese culture is an indicator of how high femininity in Balinese culture.
Femininity is represented by caring for others, attention toward environment and tendency to opt for negotiation rather than hierarchical power for problem-solving (Hofstedeet al., 2010) and thus, countries with high femininity tends to avoid tax evasion. Based on the explanation, thefifth hypothesis is as follows:
H5. Gender reinforces influence of culture toward ethical perception on tax evasion.
2.6 Influence of love of money towards ethical perception on tax evasion with gender as moderating variable
TPB shows that human behavior is affected by three types of beliefs, namely behavioral beliefs, normative beliefs, and control beliefs. TPB is relevant to explain taxpayer behavior in fulfilling their tax obligation (Mustikasari, 2007). In this context, love of money is related to behavioral beliefs. Love of money has a significant and direct influence toward unethical behavior. Love of money has significant and direct influence on unethical behavior. It means that higher level of love of money equals to lower ethical perception and vice versa (Tang, 2002;Tang and Chiu, 2003;Elias and Farag, 2010). Other research showed that the higher the nature of love of money is, the higher ethical perception on tax evasion is (Basri, 2014;
Rosianti and Mangoting, 2014;Basri, 2015).Luna-Arocas and Tang (2004)andLiu and Tang (2011)’s study reported differentfindings. Love of money helps predicting and controlling unethical behavior because love of money can be used to predict job satisfaction and unethical behavior (Luna-Arocas and Tang, 2004).Liu and Tang (2011)’s study reported that there is significant correlation between love of money and motivation to provide service for the public and job satisfaction.
It is predicted that moderating variable may cause inconsistentfindings among studies discussing influence of justice toward tax evasion. Moderating variable in this study is gender, an emphasis on values between masculine and feminine. In high masculine countries, people increase their ego, wealth and recognition to succeed (Hofstede, 1980).
Husted (1999)claimed that such country is prone to corruption because they are focusing too much on wealth. Furthermore,Husted (1999) stated that there is a positive relationship between masculinity and corruption. Therefore, countries with high masculinity are more prone to tax evasion.
Femininity is represented by caring for others, attention toward environment and tendency to opt for negotiation rather than hierarchical power for problem-solving (Hofstede et al., 2010) and thus, countries with high femininity tends to avoid tax evasion. Based on the elaboration, the sixth hypothesis is as follows:
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H6. Gender weakens influence of love of money toward ethical perception on tax evasion.
3. Methodology
This study was carried out in the Tax Service Office (KPP Pratama) of Badung Utara. KPP Pratama Badung Utara was one of the KPPs in Bali DGT Regional Office which experienced a 27.06 per cent decline in realization of revenues and 6.48 per cent of growth. The scope of this study was behavioral aspects which are limited to ethical perception on tax evasion based on three basic point-of-views on tax evasion ethics, namely tax evasion is unethical, tax evasion is sometimes ethical and tax evasion is ethical. The object of the research was ethical perception on tax evasion influenced by justice, culture, and love of money with gender as a moderating variable. The data used in this study were primary data. Primary data is data obtained directly from the source, taken and recordedfirst. In this study, the primary data were respondent’s answer to questionnaire related to the research variables.
The primary data was obtained using direct survey method or questionnaire distribution. The respondents were given a number of questions and responded accordingly.
Survey has several drawbacks, for example respondents may not be able to understand several questions. This resulted in low response rate or non-response bias.
The population was taxpayers (Wajib Pajak Orang Pribadi Non Karyawan) listed in KPP Pratama of North Badung. There are 3,828Wajib Pajak Orang Pribadi Non Karyawanwho are required tofile their tax report. These people were selected as the population because during the 2015 tax year there was a significant decline inWajib Pajak Orang Pribadi Non Karyawan tax compliance compared to 2014 tax year. The sampling method was non probability sampling and the sampling technique was incidental sampling. Incidental sampling refers to sampling technique based on incident that is anyone who runs into researcher accidentally may become a sample, when he or she meets particular criteria for source of data (Sugiyono, 2013, p. 74).The number of sample in this study was 100. The samples or respondents were asked to answer a set of questionnaire completely; information from an uncompleted questionnaire may not be used for data analysis.
Variables are described into some indicators and the indicators are used to develop the instrument or a question item (Sugiyono, 2013, p. 133).Arikunto (2010, p. 15) stated that indicator can show or explain sub-variable or variable.Table IIshows the variables used in this study and indicators of each variable.
The primary data were collected and analyzed using a popular component-based model called partial least square (PLS). PLS consists of two sub-models, measurement model or outer model and structural model or inner model. Measurement model shows how manifest or observed variable represents latent variable to measure while structural model shows degree of estimation between latent variable or construct.
4. Findings 4.1 Model evaluation
Measurement model evaluation is conducted to validate a developed model. Two major parameters being developed are to test validity (convergent validity and discriminant validity) and reliability of the construct.
Validity testing was conducted to evaluate whether a questionnaire is valid or not.
Convergent validity is related to principles that indicators of a construct are highly correlated. It takes place when two different instruments provide different score for the same construct that has high correlation. Result of convergent validity test is valid when outer
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loading factor> 0.6 and average variance extracted>0.5. Table III showed that outer loading factor for all of the indicators>0.6 which means all indicators have met convergent validity.
Reliability testing refers to accuracy, consistency and trustworthiness of an instrument.
A construct is reliable when Cronbach’s alpha and composite reliability are higher than 0.6.
Table IVshowed reliability testing result. It shows that Cronbach’s alpha of all constructs in
Table II.
Variable and indicator
Variable Indicators Symbols Reference
Ethical perception on tax evasion Tax rate Justice Tax benefit Tax Management Law enforcement
TE1
TE2
TE3
TE4
TE5
Basri (2014)
Justice Benefit
Ability to pay tax KD1
KD2
Budhiarsana and Budhiarsana (2015)
Culture Parahyangan
Pawongan Palemahan
THK1
THK2
THK3
Ariyanto (2014)
Love of Money
Good Evil Achievement Respect (self-esteem) Budget
Power
LOM1
LOM2
LOM3
LOM4
LOM5
LOM6
Basri (2014)
Gender Masculine
Feminine
GD Baridwan (2012)
Source:Various Sources of Data, 2016
Table III.
Outer loading algorithm estimation
Variable Indicator Outer loading Description
Justice KD1 0.892 Valid
KD2 0.795 Valid
THK (Culture) THK1 0.801 Valid
THK2 0.834 Valid
THK3 0.882 Valid
Love of Money LOM1 0.769 Valid
LOM3 0.825 Valid
LOM4 0.694 Valid
LOM5 0.743 Valid
LOM6 0.829 Valid
Ethical Perception on Tax Evasion TE1 0.905 Valid
TE2 0.927 Valid
TE3 0.887 Valid
TE4 0.890 Valid
TE5 0.858 Valid
Gender GD 1.000 Valid
Notes:Description: KD: Justice. THK:Tri Hita Karana (Culture). LOM: Love of Money. TE: Ethical Perception on Tax Evasion.GD: Gender
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the study>0.6, and composite reliability>0.6. Therefore, it can be concluded that the data are reliable.
Goodness offit is measurement that shows ability of a model to explain data variance.
Based onTable IV,R2of the ethical perception on tax evasion is 0.615. It shows that the model was moderate (0.33<R2<0.67). It means that the variables in the model can explain 61.5 per cent of the ethical perception on tax evasion, while the remaining 38.5 per cent is affected by other factors outside the model.
Q square predictive relevance for structural model is used to measure how well observation score the model resulted and parameter estimation. Q square predictive relevancescore is measured based on the formula: Q2= 1 - (1R12) and the score is 0.615. It shows that the model has good predictive relevance (Q2>0). Q square predictive relevance of 0.615indicated that data variance can explain 61.5 per cent of the model or in other words, the model can explain 61.5 per cent of the data, while the remaining 38.5 per cent is explained by other variables (outside the model) or error.
4.2 Hypothesis testing
Hypothesis testing was conducted based on resampling bootstrapping method, while statistical analysis used aret-test. Inner model can be used to apply result of the hypothesis- testing.Table Vshowed result of the hypothesis testing toward the structural model.
H1stated that justice has negative influence toward ethical perception on tax evasion.
Table Vshowed thatt-valuesis 2.295 (>1.64) andpvalue is 0.011 (<0.05). Therefore,H1 was acceptedand coefficient score0.274 confirmed that justice has negative influence toward ethical perception on tax evasion.
H2stated that THK (culture) has negative influence toward ethical perception on tax evasion. Table V showed that t-values is 1.686 (>1.64) and p-value is 0.046 (<0.05).
Table V.
Hypothesis-testing
Description Original sample T statistics p-values Hypothesis
KD!TE 0.274 2.295 0.011 Accepted
THK!TE 0.200 1.686 0.046 Accepted
LOM!TE 0.215 2.106 0.018 Accepted
KD * GD!TE 0.041 0.344 0.366 Rejected
THK * GD!TE 0.015 0.126 0.450 Rejected
LOM * GD!TE 0.040 0.349 0.364 Rejected
Notes:Description: KD: Justice. THK:Tri Hita Karana (Culture). LOM: Love of Money. TE: Ethical Perception on Tax Evasion. GD: Gender
Table IV.
Construct algorithm estimation
No Construct Cronbach’s alpha Composite reliability AVE R square
1 KD 0.606 0.832 0.714 0.615
2 THK 0.799 0.877 0.705
3 LOM 0.837 0.881 0.598
4 TE 0.937 0.952 0.799
Notes:Description: KD: Justice. THK:Tri Hita Karana (Culture). LOM: Love of Money. TE: Ethical Perception on Tax Evasion
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Therefore,H2 was acceptedand coefficient score 0.200showed that THK (culture) has negative influence toward ethical perception on tax evasion.
H3stated that love of money has positive influence toward ethical perception on tax evasion. Table V showed that t-values is 2.106 (>1.64) and p-value is 0.018 (<0.05).
Therefore,H3 was acceptedand coefficient score of 0.215confirmed that love of money has positive influence toward ethical perception on tax evasion.
H4stated that gender reinforces the influence of justice towards ethical perception on tax evasion. Table VI showed that t-values is 0.344 (<1.64) and p-value is 0.366 (>0.05).
Therefore,H4 was not accepted.
H5stated that gender reinforces the influence of THK (culture) toward ethical perception on tax evasion.Table VIshowed thatt-valuesis0.126 (<1.64) andp-value is 0.450 (>0.05).
Therefore,H5 was not accepted.
H6stated that gender weakens the influence of love of money toward ethical perception on tax evasion.Table Vshowed thatt-valuesis 0.349 (<1.64) andp-value is 0.364 (>0.05).
Therefore,H6 was not accepted.
5. Discussion
5.1 Influence of justice toward ethical perception on tax evasion
The analysis showed thatH1was accepted with negative coefficient. It means higher justice means lower ethical perception on tax evasion. Thefinding is in line withChuet al.(2007), Beard et al.(2009) and Annisa’ul Handayani and Cahyonowati (2014).McGee and Bernal (2006)’s study on economic students in Poland showed that when taxation system is fair, the students assumed that tax evasion is unethical.McGee and Tarangelo (2008) conducted a comparative study in the USA and Hong Kong and reported that under certain circumstances, for example when taxation system is unfair, tax evasion is ethical. Based on thefindings, it can be concluded that justice has negative influence toward ethical perception on tax evasion.
In this context, justice refers to justice in taxation system or individual perception/point- of-view/judgment on outcome taxpayers receive after paying their tax (fulfilling their obligations). Justice is measured based on two indicators, namely benefit (KD1) and ability to pay (KD2). These indicators are transformed into several question items, namely (a) I have got some benefits from taxes I paid (KD11); (b) tax revenue has been distributed in a fair manner (KD12); (c) People with higher income should not pay higher taxes (KD21); (d) I paid my taxes based on my income (KD22); and (e) Indonesian taxation system is fair because people with higher income should pay higher taxes (KD23). Benefit (KD1) is represented by question (a) to (b), while ability to pay (KD2) is represented by question (c) and (e).
Table VII showed descriptive statistics for justice (construct). It showed that KD23 (Indonesian taxation system is fair because people with higher income should pay higher
Table VI.
Hypothesis-testing
Description Original sample T statistics p-values Hypothesis
KD!TE 0.274 2.295 0.011 Accepted
THK!TE 0.200 1.686 0.046 Accepted
LOM!TE 0.215 2.106 0.018 Accepted
KD * GD!TE 0.041 0.344 0.366 Rejected
THK * GD!TE 0.015 0.126 0.450 Rejected
LOM * GD!TE 0.040 0.349 0.364 Rejected
Notes:Description: KD: Justice. THK:Tri Hita Karana (Culture). LOM: Love of Money. TE: Ethical Perception on Tax Evasion. GD: Gender
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taxes) has the highest mean (4.00) while KD21(people with higher income should not pay higher taxes) has the lowest mean (2.71). It can be concluded that the respondents put higher emphasis on KD23(Indonesian taxation system is fair because people with higher income should pay higher taxes). In addition, the questionnaires also resulted in several statements, such as“tax evasion is unethical”and“government should apply a fair taxation system in which an individual with higher income should pay higher taxes.”
Adam Smith perceived justice as commutative justice or real justice that is related to equality, balance and harmonious relationship between individuals or institutions. Such relationship involves one between individual and government, in which individuals will obey government regulations as long as the government system is fair. It is implied that fair taxation system will influence taxpayer’s compliance and help taxpayer avoiding tax evasion. Fair taxation system means taxpayer should pay tax based on how much money he or she makes (Smith, 1937). Fair taxation system and good public service encourage taxpayers to obey the applicable tax regulation and have positive influence toward tax compliance. The principle of justice is pivotal to minimize tax evasion because Indonesia applies self-assessment system.
5.2 Influence of culture toward ethical perception on tax evasion
The analysis showed that H2was accepted with negative coefficient. It means higher understanding about THK (culture) will result in lower ethical perception on tax evasion.
Okeet al. (1989), Basri (2015) andMcGee and Benk (2011)’s studies stated that cultural dimensions developed a context and interpretation about events that may influence public attitude on tax evasion.Ariyantoet al.(2014a,2014b) stated that THK, developed and grew in Bali, has broader scope because it discusses not only relationship between human being and human being with the environment, but also relationship between human being and God. THK is able to guide attitude and behavior of taxpayers to maintain integrity, through gratitude to God, honesty, caring and willingness to sacrifice for the sake of the country and public interest as well as to avoid unethical actions. Therefore, it can be concluded that THK (culture) has negative influence toward ethical perception on tax evasion.
THK is measured based on three indicators, namely parahyangan (THK1), pawongan (THK2) andpalemahan(THK3). These indicators were then used to develop some question items for the questionnaire, namely (a) Devotion to God helps me reporting my tax honestly (THK11); (b) carrying out tax obligations is sacrifice and I should not ask for any return for the sacrifice (THK12); (c) I will feel guilty if I do not pay my tax correctly (THK13), (d) I believe in the old-saying“reap what you sow”while paying my tax (THK14); (e) People I am the closest to encourage me to pay my tax because tax will benefit not only myself, but also the public and the country (THK21); (f) My income is tax deductible (THK22); (g) tax compliance is an effort to improve the environment (THK31); and (h) I am responsible for taking active participation in developing public facilities by paying my tax regularly (THK32).Parahyangan (THK1) is
Table VII.
Descriptive statistics of justice (construct)
Indicator
Respondent’s answer (%)
1 2 3 4 5 Mean
KD11 5.38 26.88 19.50 37.63 10.75 3.22
KD12 5.38 30.11 18.28 36.56 9.68 3.15
KD21 8.60 25.81 12.90 33.33 19.35 2.71
KD22 3.23 20.43 32.26 35.48 8.60 3.26
KD23 0.00 4.30 16.13 54.84 24.73 4.00
Total 3.27
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represented by question (a) to (d),pawongan(THK2) is represented by question (e) and (f) and palemahan(THK3) is represented by question (g) and (h).
Table VIIIshows descriptive statistics of THK (culture). It shows that most respondents agreed to the statements in the questionnaire and gave them score 4. Looking at the means of each statement inTable VIII, THK32 (I am responsible for taking active participation in developing public facilities by paying my tax regularly) has the highest mean, while THK21 (people I am the closest to encourage me to pay my tax because tax will benefit not only myself, but also the public and the country) has the lowest mean. Although THK21 has the lowest mean, the mean is still pretty high (3.95).Ferdinand (2006, p. 292) stated that 3.95 are categorized as“good”.
It can be concluded that the respondents put a higher emphasis on taking active participation in developing public facilities through taxes. Avoiding tax evasion and at the same time increasing tax compliance is an effort in developing public welfare and taking active role in developing public facilities through taxes. The questionnaire also resulted in several statements, such as“tax evasion is unethical because taxes have significant role in national development”.
Based on thefindings, it is implied that tax evasion may be prevented by devotion to God because it helps taxpayers maintaining their integrity, honesty and tax compliance.
Individual tends to maintain harmonious relationship with other people including the government and therefore, avoiding tax evasion. Individuals who care about public interest and their environment will perceive tax as responsibility instead of burden. THK (culture) prevents an individual from unethical behavior including tax evasion.
5.3 Influence of love of money towards ethical perception on tax evasion
The analysis showed thatH3was accepted with positive coefficient. It means that higher love of money will result in higher ethical perception on tax evasion. Thefindings are in line withTang (2002),Tang and Chiu (2003)andElias (2010)that a person’s love of money has positive and significant influence toward his or her unethical behavior. It means that higher level of love of money will reduce ethical perception and vice versa. It is in accordance to Hniszet al.(2013),Basri (2014),Rosianti and Mangoting (2014)and Basri (2015)’s studies that higher love of money means higher ethical perception on tax evasion. Thus, it can be concluded that love of money has positive influence toward ethical perception on tax evasion.
Love of money is measured based on six indicators adopted from Money Ethic Scale(MES) Tang (1992)has developed, namely good, evil, achievement, respect (self-esteem), budget and power. Based on the data analysis, out of six indicators, onlyfive are valid and reliable to use in the study, namely good (LOM1), achievement (LOM3), respect (self-esteem) (LOM4), budget
Table VIII.
Descriptive statistics of culture (construct) Statement
Respondent’s answer (%)
1 2 3 4 5 Mean
THK11 2.15 0.00 5.38 54.84 37.63 4.26
THK12 1.08 5.38 15.05 52.69 25.81 3.97
THK13 0.00 5.38 22.58 50.54 21.51 3.88
THK14 0.00 3.23 15.05 60.22 21.51 4.00
THK21 1.08 5.38 21.51 41.94 30.11 3.95
THK22 0.00 2.15 8.60 64.52 24.73 4.12
THK32 0.00 0.00 3.23 65.59 31.18 4.28
THK33 0.00 1.08 6.45 54.84 37.63 4.29
Total 4.09
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(LOM5) and power (LOM6). The indicators are transformed into several question items in the questionnaire, namely (a) money is an important factor in my life (LOM11); (b) money helps expressing my competence and ability (LOM12); (c) money helps me getting access to what I want to (LOM13); (d) money represents individual achievement (LOM31); (e) money equals to success (LOM32); (f) other people or the community respects me for my money (LOM33); (g) I put a higher emphasis on money (LOM41); (h) money helps me making friends (LOM42); (i) I make budget to make my ends meet (LOM51); (j) I lost money by spending it (LOM52); (k) money helps me gaining power and freedom (LOM61); (l) money means power (LOM62). Good (LOM1) is represented by statement (a) to (c); achievement(LOM3) is represented by statement (d) to (f);
respect (self-esteem)(LOM4) is represented by statement (g) and (h); budget(LOM5) is represented by statement (i) and (j); and power (LOM6) is represented by (k) and (l).
Table IXshowed result of descriptive statistical analysis on love of money. It shows that the statement“money helps me getting access to what I want to (LOM13)”gets the highest mean (3.75).
LOM52 (I lost money by spending it) gets the lowest mean (2.32). The questionnaire also revealed the following information, namely:
[. . .] tax does not result in direct contravention from the government and therefore, tax authorities
should be professional and have willingness to carry out public service; this will encourage people to think that spending money for tax is not a loss.
Thefindings implied that when individuals have high love of money, they will put a higher emphasis in money and consider that money is everything in their lives. People with high love of money will be less ethical than those with low love of money. In other words, people with high love of money are prone to tax evasion. An individual with higher love of money tends to have lower job satisfaction compared to his or her colleagues and therefore, is prone to unethical behavior (Chen and Tang, 2006).
5.4 Gender is moderating the influence of justice, culture and love of money towards ethical perception on tax evasion
H4,H5andH6are rejected. It means gender (feminine or masculine) did not influence how high or low influence of exogenous variable toward endogenous one is. Thefindings are at
Table IX.
Descriptive statistics of love of money (construct)
Respondent’s answer (%)
Statement 1 2 3 4 5 Mean
LOM11 7.53 25.81 34.41 25.81 2.98 2.98
LOM12 0.00 10.75 24.73 48.39 16.13 3.70
LOM13 0.00 3.23 31.18 52.69 12.90 3.75
LOM31 7.53 25.81 34.41 25.81 6.45 2.98
LOM32 6.45 25.81 33.33 27.96 6.45 3.02
LOM33 8.60 29.03 39.78 16.13 6.45 2.83
LOM41 2.15 30.11 34.41 21.51 11.83 3.11
LOM42 9.68 35.48 34.41 17.20 3.23 2.69
LOM51 0.00 3.23 31.18 53.76 11.83 3.74
LOM52 16.13 50.54 21.51 8.60 3.23 2.32
LOM61 10.75 35.48 36.56 13.98 3.23 2.63
LOM62 10.75 40.86 26.88 19.35 2.15 2.61
Total 3.03
Source:Data Analysis (2016)
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the opposite ofBasri (2014)’s study. In other words, gender does not reinforce the influence of either justice or culture toward ethical perception on tax evasion and gender does not weaken the influence of love of money toward ethical perception on tax evasion.
The researcher followedBaridwan (2012)’s recommendation to take different cultural dimensions into account that isHofstede (2001a)’s idea on masculine/feminine or gender role. In high masculine countries, people increase their ego, wealth and recognition to succeed (Hofstede, 1980).Husted (1999)claimed that such country is prone to corruption because they are focusing too much on wealth. Therefore, countries with high masculinity are more prone to tax evasion (Husted, 1999). Femininity is represented by caring for others, attention toward environment and tendency to opt for negotiation rather than hierarchical power for problem-solving (Hofstedeet al., 2010) and thus, countries with high femininity tends to avoid tax evasion. THK, Balinese local wisdom, is closely related to femininity.
Dina and Hudalah (2012)stated that two concepts in THK, namely relationship between human being and environment (palemahan) and relationship between human being (pawongan) are closely related to femininity. Harmonious relationship between human being and environment and one between human being are two indicators describing how strong the concept of femininity in Balinese culture is.
49 (52.69 per cent) of the respondents are male and 44 (47.31 per cent) are female. 40 respondents (43.01 per cent) identified themselves as masculine and 53 (56.99 per cent) identified themselves as feminine. These shows that the researchers have involved both genders equally and therefore, there is not any difference in the influence of justice, culture and love of money toward ethical perception on tax evasion between masculine and feminine taxpayers. Hofstadeet al.(2010) reported that Indonesian masculinity index is 46 while the femininity index is 54; in other words, there is a little gap between masculine and feminine in Indonesia. As the result, gender is not a moderating variable in the influence of justice, culture and love of money toward ethical perception on tax evasion.
The statistical analysis showed that neither the coefficient of gender (moderating variable) nor the interaction between gender and the exogenous variable are significant.
Solimun (2010)explained that such moderating variable is called homologiser moderation (potential moderation). Homologiser moderation refers to variable that may potentially become a moderating variable influencing relationship between predictor (exogenous) and dependent variable (endogenous). This variable does not have interaction to predictor or significant relationship to dependent variable. In this study, gender is a potential moderating variable (homologizer moderation). Gender can potentially become a moderating variable influencing relationship between justice, culture, and love of money and ethical perception on tax evasion. Gender does not have interaction with justice, culture and love of money or significant influence toward ethical perception on tax evasion.
6. Recommendation
Based on the findings and discussion, the researchers would like to propose some recommendation as follows:First, thefindings showed that culture has influence toward ethical perception on tax evasion. The study usedTri Hita Karana, Balinese local wisdom to represent culture. Further study should take Hofstede’s dimension of national culture or other type of local culture where the study is conducted.
Second, the questionnaire revealed that there are some question items which have a higher average score compared to other question items (see sub-chapter 5.7). Therefore, Directorate General of Taxes should develop policy related to:
Justice has negative influence toward ethical perception on tax evasion. Directorate General of Taxes should enforce a fair tax system (fair regulation on tax system and
