[Work in progress] Framing Taxes as Losses: A Phenomenological Study of Mental Accounting and Compliance Behavior in Indonesia

Abstract

Aim: This study examines how taxpayers perceive and manage their tax liabilities through an accounting mental lens

Methodology: Employing a phenomenological approach, in-depth interviews were conducted with tax consultants and clients who have direct experience in fulfilling tax obligations. The data were analyzed using bracketing, categorization, and thematic development.

Findings: Five key themes emerged: (1) Development and Corruption: Enemy but Relative, (2) Consultant as Facilitator of Legal Avoidance, (3) Bookkeeping as the Key to Success in Legal Avoidance, (4) Cheaper Legal Avoidance without Risk of Imprisonment, and (5) War without Weapons. Findings reveal that taxpayers frequently frame taxes as entries in a “loss account,” leading them to adopt loss-aversion strategies to minimize tax liabilities while remaining within the law. Tax consultants serve not only as technical experts but also as psychological intermediaries, linking taxpayers’ fear of sanctions with strategies of legal avoidance.

Implications: The study contributes theoretically by extending the slippery slope theory to show how loss framing shapes compliance in Indonesia. Practically, it highlights the dual role of tax consultants as both technical experts and psychological intermediaries. For policy, it stresses the need to rebuild trust and reframe taxation from a “loss” to a civic duty to foster voluntary compliance.

Originality/value: The study underscores the slippery applicability of the slope theory in Indonesia, demonstrating how compliance is shaped by negative tax framing and low trust in authorities. These insights advance understanding of tax compliance behavior in contexts where legality, avoidance, and distrust intersect