​Digital Literacy, Local Tax Service Digitalization, and Tax Compliance: Evidence from Malang, Indonesia

Abstract

Digital tax services are often treated as an uncomplicated route to compliance, although their effects depend on users' capabilities. This study examines whether digital literacy changes the relationship between perceived local tax service digitalization and taxpayer compliance in Malang, Indonesia. A cross-sectional questionnaire survey yielded 201 usable responses from individual and business taxpayers who used electronic local tax administration. Ten items measured each construct, and moderated regression analysis tested the proposed relationships. Digitalization (B=1.226, p<0.001) and digital literacy (B=1.650, p<0.001) were positively associated with compliance. Contrary to the hypothesized strengthening effect, their interaction was negative (B=-0.030, p<0.001). The model explained 73.0% of the variance in compliance. This pattern suggests diminishing dependence, digitally capable taxpayers may comply more independently, whereas less-capable users rely more heavily on service simplicity, stability, security, and support. This result does not make literacy undesirable. It shows that uniformly improving digital interfaces may produce unequal marginal gains. Local tax authorities should combine accessible system design with targeted assistance and capability building. Because measures were self-reported and recruitment was not documented as a verifiable probability draw, the findings are associational and locally bounded.

Keywords

Digital Government Digital Literacy Local Taxation Moderated Regression Taxpayer Compliance