The effect of tax morale on tax evasion in the perspective of Tri Hita Karana and tax framing

Article history: Received: November 26, 2020 Received in revised format: January 3


Introduction
The low compliance ratio indicates the level of taxpayer compliance. Regionally, the tax office of Palu City shows that the compliance ratio had been still low for the past four years, 2015-2018 consecutively, namely: 69.88%, 53.97%, 50.28%, and 60.59%. The level of compliance in paying taxes will trigger amnesty, encouragement and ultimately trigger the practice of tax evasion (Deane, 1984). Taxpayers want to pay the lowest possible tax because taxes will reduce income or net profit, while the government wants the highest possible tax revenue to finance government administration. This difference in interests causes taxpayers to reduce the number of tax payments, both legally (tax avoidance) and illegally (tax evasion).
Cultural aspects that affect tax morale in tax evasion have also been studied by Alm & Martinez-Vazquez (2007), Alm & Torgler (2006), Basri (2016), Bosco & Mittone (1997), Brink & Porcano (2016), Cummings et al. (2009), Deyneli (2014a), Halla (2012), Lago-Peñas & Lago-Peñas (2010), Li (2010), McGee & Benk (2011), Nerre (2006), Nickerson et al. (2009), Richardson (2008), Torgler & Schneider (2009), and Tsakumis et al. (2007). The culture in question is demographic factors, culture in various countries, power distance, and masculinity. Culture shows the consequences of differences in tax morale. These cultural differences have an important role in determining individual attitudes towards the desire to pay taxes. Another factor that is expected to encourage tax compliance is local culture, such as the Tri Hita Karana (THK), the Balinese culture. 1500 THK culture is local wisdom that has become a cultural personality for Balinese life in various sectors. THK is a moral basis (Sukarma, 2016), namely three causes of happiness and well-being that reflect a harmonious life between humans and their God (parahyangan), between humans (pawongan), and between humans and their environment (palemahan) (Ariyanto et al. al., 2017;Buwana et al., 2013;Paramajaya, 2018;Rahayu et al., 2016;Wardani et al., 2015). Related to the concept of THK taxation, it can prevent someone from doing tax evasion. THK is considered to be able to demand taxpayers' attitude and behavior to maintain integrity through gratitude to God, always instill honesty, have a concern, and are willing to sacrifice for the country's sake and shared interests. Research on moral topics based on THK in tax evasion has never been done before, so it is essential to do it. Besides, the topic is interesting because the THK culture is unique as a tax morale basis in taxpayers' behavior in fulfilling their obligations.
Apart from tax morale factors in tax evasion, several other factors are thought to distort taxpayers in fulfilling their tax obligations. Various studies have found that one of the factors that can distort taxpayer compliance is the framing of information (Cullis et al., 2012;Feld et al., 2007;Fochmann & Wolf, 2019;Kirchler & Maciejovsky, 2001;Robben, Webley, Weigel, et al., 1990;Schmidt, 2001). Framing deals with how individuals perceive or structure a decision or how a fact or information is disclosed. At the same tax decision problem, because of the different conveying information methods, taxpayers show different risk preferences and make different tax decisions. This reasoning shows that taxpayer compliance depends on the framing effect.
THK culture is the local wisdom of the Balinese Tribe, which is based on the teachings of the Hindu religion, which emphasizes that prosperity, successfulness, a just society, and true happiness can be realized through three dimensions of harmony (Ariyanto et al., 2017;Buwana et al., 2013;Paramajaya, 2018;Rahayu et al., 2016;Wardani et al., 2015). Individuals are said to have good morals in the THK concept if the THK concept is embedded in them (Buwana et al., 2013;Wardani et al., 2015). On the other hand, Paramajaya (2018) states that humankind will not live harmoniously and peacefully if they violate the THK concept. If taxpayers are associated with morals based on the THK culture, they are said to have good morals if they apply THK in their lives, whereas if they violate THK culture, they are said to have bad morals. So it can be expected that morals in the THK perspective can distort tax evasion.
The explanation of tax morale is based on attribution theory can also be useful in making predictions about tax avoidance behavior and the suggested penalties that result from that behavior (Kelley, 1973). Specificity information can be defined as a summary statement describing the relationship between different situations and their corresponding effects. In tax avoidance arrangements, an entity can be viewed as an incident or opportunity to engage in various illegal or unethical activities, tax avoidance behavior.
Based on the previous explanation, the hypothesis that can be formulated is as follows.
H 1 : Tax evasion on taxpayers in Tri Hita Karana's perspective who has high tax morale is lower than tax evasion for taxpayers who have low tax morale.
The prospect theory from Kahneman & Tversky (1979) is used as the basis for explaining the frame used. The negative-frame encourages risk-taking behavior, and the positive-frame encourages risk-averse behavior. In the context of tax evasion decisions, the information presented in a negative-frame manner will affect the increase in risk preferences of taxpayers and place taxpayers in the loss domain, while positive-frames will reduce taxpayers' risk preferences and place taxpayers in the gain domain (Fochmann & Wolf, 2019;Robben, Webley, Elffers, et al., 1990;Smith & Kinsey, 1987).
Based on the explanation, the hypothesis formulated is as follows: H 2 : Tax evasion for taxpayers with positive framing is lower than tax evasion for taxpayers with negative framing.

Experimental Design
This study used an experimental laboratory method with a 2 × 2 factorial pattern between subjects (between-subject). The first factor is tax morale in the perspective of THK with high and low levels, while the second factor is tax framing with positive framing levels and negative framing levels. All participants were randomly assigned to each cell. Participants in the experiment in this study were taxpayers of the overseas Balinese who live in Palu. Participants are taxpayers who have income from independent work.

Tasks and Experimental Procedure
Participants are screened in a case of the decision-making process of a taxpayer conducting business activities where the participant is asked to decide whether to report gross income by the realization that has occurred or not. This study's experimental instrument is an adaptation and modification of the research (Cullis et al., 2012). The case material instrument in this study has undergone modifications, including changes in foreign currency dollars to rupiah, taxpayers' business types and tax regulations adapted to taxation regulations in Indonesia, and manipulation questions used to test internalization related to tax framing manipulation. Before implementing the core experiment, the instrument validity test was carried out in two stages, namely a focus group discussion (FGD) and a pilot test. The core experiment's implementation includes the steps of conducting the experiment, checking manipulation, and filling in demographic data. In the core experiment implementation session, the stages carried out were the sequence of opening and filling in informed consent, sharing and reading practical instructions, playing THK videos, measuring morals, distributing snacks, distributing case material packages, working on core case materials, working on manipulation checks, filling in data demographics, de-briefings, and distribution of lunches and souvenirs.

Measuring Variable
The dependent variable in this study is tax evasion. This variable is proxied in preference for individual taxpayer decisions to report income obtained from independent work. The taxpayer's income is closer to realized income means the lower is the tax evasion made by taxpayers. This response will be used for statistical analysis.
There are two independent variables in this study. The first is tax morale in the THK perspective, measured by two levels: high and low. A questionnaire measured the tax morale variable in the THK perspective in this study to classify participants with high and low tax morale in the THK perspective. The second independent variable is tax framing, measured by two levels: positive and negative framing. The tax framing variable is by providing written information about the consequences of the amount of reported income. Positive framing is described in terms of potential gain or savings, and negative framing is described in terms of potential loss or waste.

Manipulation Check
In this study, manipulation checking was carried out by giving three questions to the participants. Participants are asked to choose one of the answers that best describe the conditions experienced in the case material. Asking this question is essential to prevent participants from misunderstanding the given case. Participants are declared to pass the manipulation check if they are all correct in answering the questions given.

Data Analysis Technique and Hypothesis Testing
Before testing the hypothesis, the data will be analyzed descriptively. The two-way ANOVA data analysis technique is used to test the hypothesis with the SPSS version 25 statistical application.

Results
Two-way ANOVA is conducted to test hypotheses one and two with the SS Type III method. The following shows the average tax evasion value at each level. The results of hypothesis testing one and two are presented in Table 2. ANOVA test shows that the F value for the effect of tax morale in the THK perspective on tax evasion is 47,227 and a significant value of 0,000. The significant value is smaller than 0.05, which means an influence between tax morale in the THK perspective on tax evasion. The weighted mean value of income reported by subjects with high tax morale in the THK perspective is more significant than subjects with low tax morale in the THK perspective. These statistical test results support the alternative hypothesis one (HA1) and reject the null hypothesis one (H01). The second hypothesis is the treatment of tax framing on taxpayers of tax evasion. ANOVA test (Table 2) shows that the F value for the effect of tax framing on tax evasion is 9,356 and a significant value of 0.04. The significant value is smaller than 0.05, which means an influence between the tax framing on the tax evasion. Moreover, subjects with positive framing treatment's average income value were more significant than subjects with negative framing treatment.

Discussions
The results of data processing indicate that hypothesis one is accepted. Therefore, the F value is 45.131, and the significance value is 0.000. This value indicates that taxpayers with high tax morale in the THK perspective tend to do less tax evasion. This result means that THK has underpinned taxpayers in carrying out their tax obligations. If it is related to the moral teachings in THK, this is in line with the research obtained. Therefore THK teaches that actions determine good and bad karma. They likewise concern obligations in taxes.
This result indicates that taxpayers with high tax morale in the THK perspective perform lower tax evasion than taxpayers with low tax morale in the THK perspective. The awareness to apply morals with THK teachings is reflected in the willingness to report income from free work. This result indicates that the implementation of tax obligations cannot be separated from the moral teachings held.
This study investigates whether tax morale in the THK perspective is framed as high tax morale and low tax morale affects tax evasion. This study found that taxpayers' tax evasion with high tax morale is lower than the tax evasion for taxpayers with low tax morale. Overall, the overseas Balinese taxpayers in their taxation behavior are based on achieving prosperity through three harmonies with fellow humans, nature, and God. In these three harmonious relationships, the taxpayer's intrinsic motivation is created to comply with the tax voluntarily. It can be said that high tax morale in the THK perspective can motivate taxpayers not to do tax evasion and report their taxes following applicable tax regulations.
The test results show that hypothesis one is supported by empirical evidence in this study. Taxpayers with high tax morale in the THK perspective will lower tax evasion than taxpayers with low tax morale. This study's findings also show that taxpayers who have high tax morale apply the Dharma THK in their tax obligations. The THK concept can fortify taxpayers' attitude and behavior to be wise because tax compliance and tax evasion have implications for the accountability that taxpayers must bear to the government and God. High tax morale based on the THK dharma tends to encourage taxpayers to report higher income by the realization. This rationalizing is because Balinese taxpayers who have high THK awareness can apply high tax morale. On the contrary, taxpayers who do not have THK awareness in their tax morals will report lower income than the realization.
The results of this study have implications for the world of tax research and practitioners. This study expands the literature on tax non-compliance. Especially non-compliance due to tax evasion behavior, which so far does not care about taxpayers' morale formed by local wisdom prevailing in the society. Some of the research examines tax morale which only involves a nation's national culture and non-monetary psychology (Alm & Torgler, 2006;Brink & Porcano, 2016;Cowell & PF Gordon, 1988;Dell'Anno, 2009;Eisenhauer et al., 2011;Erard & Feinstein, 1994;Feld et al., 2007;Frey, 1997;Kaplan et al., 1997;Keenan & Dean, 1980;Kemme et al., 2020;Myles & Naylor, 1996;Russo, 2013;Sidani et al., 2014;Torgler, 2005;Torgler & Schneider, 2007, 2009). On the other hand, this research involves THK local wisdom, which Balinese people believe, including those in Palu City. THK as the basis for moral teachings in Balinese Tribe society will encourage happiness manifested through a harmonious life, including obedience to the government.
In the realm of practice, this study's findings imply that tax morale as the basis for taxpayer behavior can distort tax evasion. This study also complements the results of previous research, which explains tax morale influencing taxpayer compliance behavior. Besides, these findings provide empirical support for the importance of tax morals, especially tax morals, in the framework of local wisdom prevailing in society to improve taxpayer compliance. This result suggests that the importance of local wisdom is closely related to one's behavior towards tax compliance.
Although living in a heterogeneous cultural environment, the overseas Balinese in Palu City are still based on the culture of their ancestors, THK in living their lives, including awareness as a taxpayer. One of the beliefs of the Balinese tribe is that there is karma from every action that is carried out. Good deeds will be good for him and his environment, and bad actions will only be bad. The moral teachings in the THK culture motivate taxpayers to enlighten themselves and the environment with good light and behavior and good tax morals. This finding is in line with attribution theory which explains that disposition factors are influenced by internal factors relatively more comfortable to control (Heider, 1958). The internal factor in this study is THK.
The second hypothesis is accepted with an F value of 9,356 and a significance value of 0.04. This result gives the meaning that there is a difference in the effect of positive and negative framing on tax evasion. This result means that taxpayers with positive framing treatment will tend to carry out less tax evasion.
This study provides empirical evidence that taxpayers with positive framing treatment report higher income than taxpayers with negative framing treatment. These findings indicate that taxpayers with positive framing treatment tend to lower tax evasion than taxpayers with negative framing. Therefore, the subjects in this study, if in a favorable position, tend to avoid risks. Meanwhile, taxpayers who are in a loss position tend to take risks. It can be said that positive tax framing can pressure taxpayers to carry out tax evasion. In this study, tax savings on positive framing are a favorable condition for taxpayers. Meanwhile, losing the opportunity to invest in negative framing is an adverse condition for taxpayers. Decisions made by taxpayers due to the tax framing treatment will pose a risk for taxpayers to be examined by the tax authorities, which will lead to tax sanctions.
The results of this study indicate that taxpayers who receive positive framing treatment will be motivated to avoid the risk of tax penalties in the form of fines. In this study, positive framing treatment states that taxpayers reporting their income below their actual income will make tax savings. Meanwhile, negative framing in this study can encourage risk-taking behavior. This study's negative framing treatment shows that if taxpayers report their entire income, they will lose their investment opportunity.
In the context of tax evasion decisions, the information presented with a positive frame can reduce the risk preference of taxpayers and place taxpayers in the gain domain. However, the information presented with a negative frame can influence taxpayer risk preferences and place taxpayers in the loss domain. The results of this study can confirm the prospect theory proposed by Kahneman & Tversky (1979) to explain the frame used in decision making and line with prospect theory in tax evasion research conducted by Fochmann & Wolf (2019), Robben, Webley, Elffers, et al. (1990), and Smith & Kinsey (1987).
If the frame is presented differently to each subject in the same tax issue, it will result in a different decision. Positive framing has a more significant influence on tax evasion than negative framing. Concerning tax issues that are conveyed with positive framing, the subject tends to report higher income when the subject seems to be benefiting. While tax issues are conveyed with negative framing, the subject seems to be disadvantaged. They tend to report lower income. This result means that this research is consistent with research conducted by Afriyenti & Misra (2015), Fatemi et al. (2008), J. Hasseldine & Hite (2003), Kirchler & Maciejovsky (2001), Robben, Webley, Weigel, et al. (1990), Schepanski & Kelsey (1990), Schmidt (2001), and Smith & Kinsey (1987).
The contribution of this research to the world of taxation and practical research is very urgent. Experiments in this study have enriched the finding that taxpayers will avoid risk if they are in a gain position, whereas if they are in a loss position, they will tend to take risks. This result means previous research conducted by some researchers on risk choice frameworks in taxation supported this study (Afriyenti & Misra, 2015;Fatemi et al., 2008;Fochmann & Wolf, 2019;Hasseldine & Hite, 2003;Kirchler & Maciejovsky, 2001;Robben, Webley. , Elffers et al., 1990;Robben, Webley, Weigel, et al., 1990;Schepanski & Kelsey, 1990;Schmidt, 2001;Smith & Kinsey, 1987). Likewise, Grolleau et al. (2016) found that humans tend to behave dishonestly to maximize personal gain. Meanwhile, individuals tend to commit fraudulent acts when they are threatened with loss. Meanwhile, individuals are reluctant to take risks for certain benefits. Thus, taxpayers with positive framing are less likely to take risks while still complying with applicable tax obligations as appropriate.
This empirical evidence is also essential in practitioners' realm that taxpayers in conducting tax evasion are influenced by framing. Fiskus should consider the effect of the framing factor in socializing tax compliance to increase taxpayer awareness of complying with tax regulations. Presentation of information in different formats (positive framing) will affect tax evasion decisions by taxpayers. This result is related to the strategy of drawing taxpayers' conclusions regarding the information presented because taxpayers will tend to avoid risks if they feel they benefited. Fiskus must pay close attention to the framing factor because it can distort tax evasion carried out by taxpayers.

Conclusion
This study found that tax morale in the THK perspective and tax framing can distort tax evasion. Tax evasion on taxpayers with high tax morale in the THK perspective performs lower tax evasion than taxpayers with low tax morale. Taxpayers with high tax morale in the THK perspective tend to do lower tax evasion and vice versa. This result affirms that high tax morale in the THK perspective as an intrinsic motivation can distort tax evasion. Tax morals in the THK perspective can be used to prevent tax evasion. These findings support the attribution theory.
Likewise, this study found that the tax evasion on taxpayers treated with positive framing was lower than the tax evasion for taxpayers treated with negative framing. This result indicates that the competent authorities should convey tax information using positive framing to reduce tax evasion actions. This finding supports the prospect theory, taxpayers who face profits tend to avoid risk, while taxpayers who face losses tend to choose risk. So it can be said that positive framing treatment in tax information can distort tax evasion.