The Effect of Tax Collection Costs on Tax Revenue Realization with Tax Revenue Budget as a Mediating Variable

Abstract

Efficient tax administration is crucial for maximizing government revenue and supporting fiscal sustainability. This study investigates the effect of tax collection costs on tax revenue realization, with the tax revenue budget as a mediating variable. The research employs Structural Equation Modeling (SEM) using SmartPLS to analyze panel secondary data from Indonesian districts and municipalities during 2018–2022, focusing on regions with complete and consistent financial data. Data analysis involves examining the relationships between variables, testing both direct and indirect effects, and assessing the mediating role of the tax revenue budget. The findings indicate that tax collection costs positively affect the tax revenue budget, which in turn significantly influences tax revenue realization. While the direct impact of tax collection costs on actual revenue is relatively small, the mediating effect of the budget strengthens this relationship. These results highlight that effective allocation of administrative resources and strategic budget planning are key to improving regional tax revenue performance. Overall, the study provides insights into tax administration efficiency and governance, emphasizing the integration of administrative expenditures with accurate budgeting to enhance fiscal outcomes.