The Effectiveness of Tax Collection with Warning Letters and Forced Letters to Increase Value-Added Tax Receipts

Abstract

The most cost-effective way to collect taxes is through voluntary public compliance with tax laws. However, not all taxpayers pay taxes on time, so the tax service is forced to use different tax collection methods and stimulate taxpayers' responsibility. These methods include warning letters and forced letters. This study aimed to analyze the effectiveness of tax collection with a warning letter and a forced letter to increase value-added tax (VAT) receipts at the Tax Office in Surabaya, Indonesia. The research method used in this study is a comparative descriptive method. The data analysis technique used in this research is the descriptive comparative analysis of ratios: the ratio of the effectiveness of issuing warnings and forced letters and the ratio of the contribution of VAT arrears. The key informants in this study were the data and information management section staff regarding supervision and tax collection which served at the Pratama Pabean Cantikan Surabaya Tax Office. The results showed that VAT collection with a warning letter was ineffective. Tax collection significantly doesn't increase VAT revenue at the Surabaya Tax Office Surabaya. Most taxpayers who are negligent or unable to pay off their tax debts apply an objection letter on tax arrears. They used it for instalments to pay off the entire tax debt. The results of this study imply that tax officers must examine in detail all tax objection letters and give approval carefully. This study recommends that the tax authorities carry out more active informational work with taxpayers because the costs of other methods of forced tax collection are comparatively higher. On the other hand, the number of bailiffs should be increased because it aligns with the increased tax revenue target every year.

Keywords

• tax collection
• warning letter
• forced letter
• value-added tax
• tax discipline