Determinant regional tax revenue in fear of COVID-19 in East Java: Spatial Durbin Model (SDM) spillover approach

Abstract

The COVID-19 pandemic has caused economic, social and political crises in the infected countries. These countries implemented a lockdown policy to anticipate the spread, resulting in decreased financial revenues, including tax revenues. It is not easy to achieve tax revenue during a pandemic because almost all sectors have declined. Spatial interactions influence tax revenue, so a spatial model must be applied in its analysis. One of the spatial models is Spatial Durbin Model (SDM) is the development of the spatial autoregressive model (SAR). In the SDM model, the dependent variable and the independent variable both contain spatial effects. Spillover is the tendency of a changes in one area are following changes in another areas. This study's main objective is to estimate spillover's effect on districts/cities tax revenue and its spread in East Java. Researchers found a positive spatial spillover of GRDP, inflation, number of industries, and total population on tax revenue in East Java. © 2022 Author(s).