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Abstract
This study aims to analyze the influence of green tax incentives and tax literacy on green innovation and tax compliance among MSMEs (Micro, Small, and Medium Enterprises) in Makassar City, with green innovation acting as a mediating variable. The research is motivated by the growing need for MSMEs to transition toward sustainable business practices amidst climate change pressures and fiscal policy demands. Employing an explanatory quantitative approach, the study utilizes Structural Equation Modeling (SEM) with AMOS version 24. A total of 150 active MSMEs were selected through purposive sampling. The findings reveal that both green tax incentives and tax literacy significantly influence green innovation, and green innovation significantly influences tax compliance. Tax literacy also has a direct positive effect on tax compliance, while the direct effect of tax incentives on tax compliance is not significant. However, both green tax incentives and tax literacy indirectly affect tax compliance through green innovation. These results highlight the crucial role of green innovation as a behavioral bridge linking fiscal policy and tax compliance in the MSME sector. The study contributes to theoretical development in sustainable fiscal behavior models and offers practical insights for policymakers and MSME support institutions at the local level.
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References
- Chen, Y.S., Lin, Y.H., & Chang, C.H. (2022). Green innovation and firm performance: A resource-based view. Journal of Cleaner Production, 364 , 132587, 488 –490.
- Fauzi , A., & Yulianita , N. (2021). Tax Literacy and MSME Performance: A Behavioral Perspective. Journal Indonesian Accounting and Finance , 18(2), 110-122.
- https://doi.org/10.9744/jmk.23.1.10-17
- Hutagalung , R., & Jati , WA (2023). Literacy MSME Tax and e-Filing Implementation . Journal Policy Fiscal and Taxation , 4 (2), 33–41.
- Garad , Alaa & Khalifa, M. (2024). Green Innovation and Firm Performance: The Role of Environmental Management Practices. International Journal of Green Management and Business Studies, 4(1), 1-10. https://www.doi.org/10.56830/IJGMBS06202401
- Goulder , L. H., & Parry, I. W. H. (2008). Instrument Choice in Environmental Policy. Review of Environmental Economics and Policy, 2(2), 152–174. http://dx.doi.org/10.2139/ssrn.1117566
- Kawai, M., Yoshino, N., & Morgan, P. J. (2023). Financing green SMEs in Asia. Asian Development Review, 40 (1), 221–238.
- Kirchler , E., Hoelzl , E., & Wahl, I. (2014). Enforced Versus Voluntary Tax Compliance: The 'Slippery Slope' Framework. Journal of Economic Psychology, 29(2), 210–225. http://dx.doi.org/10.1016/j.joep.2007.05.004
- OECD. (2021). Tax Policy Reforms 2021: Special Edition on Tax Policy During the COVID-19 Pandemic. OECD Publishing. https://doi.org/10.1787/427d2616-en
- OECD. (2022). Tax Policy Reforms 2022: OECD and Selected Partner Economies . Paris: OECD Publishing. https://doi.org/10.1787/067c593d-en .
- Yong, J.Y., Yusliza , MY, & Jabbour , C.J.C. (2020). The role of green innovation in sustainable business performance: Empirical evidence from Malaysia. Technological Forecasting and Social Change, 154 , 119971, 1024–1026. https://doi.org/10.3390/economies10050117
- Yong, HH, Wahyuni , S., & Permatasari , P. (2020). The Mediating Role of Green Innovation in the Relationship Between Environmental Regulation and Firm Performance. Journal Technology Management , 19(3), 145–158.
- Zhang, L., Li, Q., & Wang, J. (2022). Green Tax Incentives and Innovation in Small Businesses: Evidence from China. Environmental Economics and Policy Studies, 24(1), 95–113. https://doi.org/ 10.3389/fenvs.2022.1067534
- Zhang, D., Rong, Z., & Xiao, Z. (2022). Green Tax Incentives and Innovation: Evidence from Manufacturing SMEs. Sustainability, 14 (2), 15–29.
References
Chen, Y.S., Lin, Y.H., & Chang, C.H. (2022). Green innovation and firm performance: A resource-based view. Journal of Cleaner Production, 364 , 132587, 488 –490.
Fauzi , A., & Yulianita , N. (2021). Tax Literacy and MSME Performance: A Behavioral Perspective. Journal Indonesian Accounting and Finance , 18(2), 110-122.
https://doi.org/10.9744/jmk.23.1.10-17
Hutagalung , R., & Jati , WA (2023). Literacy MSME Tax and e-Filing Implementation . Journal Policy Fiscal and Taxation , 4 (2), 33–41.
Garad , Alaa & Khalifa, M. (2024). Green Innovation and Firm Performance: The Role of Environmental Management Practices. International Journal of Green Management and Business Studies, 4(1), 1-10. https://www.doi.org/10.56830/IJGMBS06202401
Goulder , L. H., & Parry, I. W. H. (2008). Instrument Choice in Environmental Policy. Review of Environmental Economics and Policy, 2(2), 152–174. http://dx.doi.org/10.2139/ssrn.1117566
Kawai, M., Yoshino, N., & Morgan, P. J. (2023). Financing green SMEs in Asia. Asian Development Review, 40 (1), 221–238.
Kirchler , E., Hoelzl , E., & Wahl, I. (2014). Enforced Versus Voluntary Tax Compliance: The 'Slippery Slope' Framework. Journal of Economic Psychology, 29(2), 210–225. http://dx.doi.org/10.1016/j.joep.2007.05.004
OECD. (2021). Tax Policy Reforms 2021: Special Edition on Tax Policy During the COVID-19 Pandemic. OECD Publishing. https://doi.org/10.1787/427d2616-en
OECD. (2022). Tax Policy Reforms 2022: OECD and Selected Partner Economies . Paris: OECD Publishing. https://doi.org/10.1787/067c593d-en .
Yong, J.Y., Yusliza , MY, & Jabbour , C.J.C. (2020). The role of green innovation in sustainable business performance: Empirical evidence from Malaysia. Technological Forecasting and Social Change, 154 , 119971, 1024–1026. https://doi.org/10.3390/economies10050117
Yong, HH, Wahyuni , S., & Permatasari , P. (2020). The Mediating Role of Green Innovation in the Relationship Between Environmental Regulation and Firm Performance. Journal Technology Management , 19(3), 145–158.
Zhang, L., Li, Q., & Wang, J. (2022). Green Tax Incentives and Innovation in Small Businesses: Evidence from China. Environmental Economics and Policy Studies, 24(1), 95–113. https://doi.org/ 10.3389/fenvs.2022.1067534
Zhang, D., Rong, Z., & Xiao, Z. (2022). Green Tax Incentives and Innovation: Evidence from Manufacturing SMEs. Sustainability, 14 (2), 15–29.