The impact of regional economic discrimination on tax compliance

This paper seeks to explain the relationship between regional economic discrimination in the form of three indices of need discrimination, capacity discrimination and combined index of tax compliance across provinces for the period of 2002-2016 in three five-year periods. The research model was estimated by GLS method. The results of the model estimation show that there is a significant relationship between economic discrimination and tax compliance. Combined regional economic discrimination and regional economic need-based discrimination and capacity-based discrimination all have a significant and positive relationship with tax compliance so that the greater the amount of discriminatory provincial funding, the more tax compliance in that province, and the more funds. The less discriminatory the province is, the less tax compliance there.