Barking Up the Wrong Tree: SMEs' Perception of Tax using the ZMET Method

Small and Medium Enterprises (SMEs) has been a backbone for Indonesian economy over the years. This study aims to explore and gain an in-depth understanding of SMEs’ perceptions regarding tax imposed by the government. The study is a qualitative investigation in which nine in-depth interviews with SMEs were conducted based on the Zaltman Metaphor Elicitation Technique (ZMET). The findings reveal deep-seated perceptions in SMEs regarding to tax imposed on them. There are 24 elicited constructs which describe SMEs’ mental model of tax. The constructs are framed into four deep metaphors which reflect SMEs perceptions on tax: Distrust to the Government, Misclassification, Mistreatment and Disincentive. This study will contribute to provide suggestion to the government, particularly General Directorate of tax, that in order to give “stick” to SMEs, government may try to give “carrots” in SMEs tax cases. This study contributes to the use of ZMET as a data collecting method to examine issues that tend to be "sensitive". Previously, ZMET has been used widely in marketing research, however this research could prove that other topics of research could also use this method


Introduction
The number of Small and Medium Enterprises (SMEs) have been substantially increased in recent years. As the number has risen, SMEs have proven to contribute significantly to the Gross Domestic Product (GDP) (Akinboade, 2015). Entrepreneurship in SMEs has created sustainable development and eradicating poverty in some developing countries (Tilley and Perish, 2011). Purwati et al., (2014) stated that SMEs also had been a bedrock for the Indonesian economy, particularly in managing the effect of economic crisis. According to the Indonesian Ministry of Cooperatives and SMEs and Statistics Central Agency (Badan Pusat Statistik/BPS), in 2018, SMEs absorb 90.12% of Indonesia's total workforce.
The data illustrates how vital is SMEs for the Indonesian economy. As a crucial sector and the foundation of the economy, the government should support and facilitate SMEs; therefore, SMEs can survive and may not experience failure. Pleis (2014) stated that significant failures occurred in SMEs in the United States. Seventy-five percent (75%) of SMEs failed, and the ultimate factors were accounting and tax.
Apart from the US, tax has also been a problem for SMEs in developing countries (Ameyaw et al., 2016;Inasius, 2015;Akinboade, 2015;Eragbhe and Modugu, 2014;Mansor and Hanefah, 2008;Abrie and Doussy, 2006). Inasius (2015) conducted a study with 319 individual retailers in Indonesia, which showed that tax policy was a burden for small retailers. Abrie and Doussy (2006) argued that tax compliance requirements were a "stumbling block" for SMEs. Imposing tax on SMEs, however, will hamper SME's growth. Meanwhile, Borges, et al. (2018) showed that most public entrepreneurship policies focused mainly on financial strategies such as tax policy. Like two sides of a blade, the government needs tax from SMEs to finance the country's development. On the other hand, tax could be an obstacle to small businesses' growth.
In Indonesia, only 0.006% of SMEs pay taxes (Ministry of SMEs, 2017). Numerous studies have shown that tax compliance among SMEs is low, tax rates are perceived to be too high. Thus tax is considered a threat and a burden for them. Moreover, SMEs face several challenges to sustain, such as limited access to financial institutions; only 25% of total SMEs which have access to financial institutions, full control of accounting and practices from the owners despite their less knowledge of accounting (Huerta, et al.,2017), and trust issues in using professional accountant services (Blackburn, et al., 2018) Nevertheless, only a few studies are revealing the deep-seated perceptions of SMEs on taxation. Most of the previous research used a quantitative approach. This study aims to explore and gain an in-depth understanding of SMEs' views of tax by using the ZMET (Zaltman Metaphor Elicitation Technique) method. ZMET is a technique that elicits both conscious and more importantly, unconscious thoughts by exploring the metaphoric and non-literal expression of participants. ZMET utilises neuroscience insights to dig deeper knowledge to gain a more profound understanding of participants' beliefs, behaviours, and decisions by using pictures as media. ZMET will reveal a mental model and will result in a consensus map. A mental model can be used to shape one's behaviour and create an approach to manage problems regarding behaviour. This research will have theoretical, practical and methodological implications. Theoretically, this research will enrich the results of previous study on taxes and SMEs in developing countries. Practically, this research will give an idea to the government about what tax treatment is most appropriate for SMEs. Methodologically, this research contributes to the use of ZMET as a method to examine issues that tend to be "sensitive".
The rest of this paper organises as follows. The second part describes the literature review regarding tax regulation in Indonesia and theories of tax. The third section describes applied research method. The fourth section describes the results of research and discussion. The fifth section are conclusions, implications, and opportunities for future research.

Small and Medium Enterprises (SMEs) in Indonesia
Small business in Indonesia is regulated under the Indonesian Law 20/2008. The Law divided the small business into three categories: micro, small and medium, based on its asset and turnover. According to the Law, small business refers to economic activities carried by individual or entity which is not owned, controlled, directly or indirectly part of medium or large business, or a subsidiary or branch of the company. Medium business refers to economically productive activities that stand-alone, carried by an individual or business entity. Medium-sized enterprise is not a subsidiary or branches of companies, not owned, controlled, or be a part either directly or indirectly by the small business or large enterprise. The following table is business criteria based on the Law.

Tax for Small Medium Enterprises (SMEs)
By March 2018, the tax rate for Indonesia SMEs has reduced from 1% to 0.5%. The rate is imposed to SMEs gross revenue by Government Regulation Number 46 of 2013. This regulation is the core of SME tax because, from the government side, it provides solutions for SMEs in the form of simplicity in carrying out tax obligations. In the government's point of view, the calculation based on gross revenue will facilitate SMEs in terms of easiness since SMEs do not need to provide complete bookkeeping to pay their annual tax.

Fiscal Psychology Theory
Schmolders first coined fiscal Psychology Theory in 1959. Schmolders believed that psychological analysis can help a lot in explaining economic phenomena, including tax. The theory emphasises the loss of motivation from taxpayers to pay taxes due to the absence of direct benefits from tax payments (Hasseldine and Bebbington, 1991). Meanwhile, individual resistance (negative tax compliance) results from the personal experience of each individual (Schmolders, 1959). This personal experience also depends on the environment (community). Based on the theory of fiscal psychology, although the citizen cannot directly feel the impact of the taxes paid, the government must be transparent. The government must openly show that the tax is indeed used to procure public goods, and not arbitrarily by the government (Rosdiana and Irianto, 2014). The benefits of tax in the contemporary tax definition eventually evolved, that the perceived benefits for taxpayers could be in the form of easy access to government information so that it would build social trust from the community through transparency (Rosdiana and Irianto, 2014).

Slippery Slope Framework
Based on the Slippery Slope Framework, two things underlie voluntary compliance in paying taxes, namely the power of authority and trust in it (Kirchler et al., 2008). The sense of trust in the theory is a "social trust" from the public to the government that will motivate the people to pay taxes. The interaction between the power of authority and trust in authority will affect the level of tax compliance. For example, in conditions where trust in authorities is low, and control of authorities is weak, society will tend not to pay taxes. Indonesia is one of the countries with a low Corruption Perception Index, ranked 96th out of 180 countries (Transparency International, 2018). One of the major corruption cases that occurred was carried out by Gayus Tambunan, a senior and respected tax employee. This corruption was detrimental to Indonesia and worth billions of Rupiah. In addition to Gayus, there are still many other tax officials caught in fraud. These tax corruption cases provide a terrible precedent for the image of taxation in Indonesia.

Methodology
In addressing the research question, a qualitative research approach is used. To explore and gain a deep understanding of SMEs' perceptions of tax, The Zaltman Metaphor Elicitation Technique (ZMET) method is used.
ZMET is a technique that elicits both conscious and primarily unconscious thoughts by exploring participants' non-literal or metaphoric expressions (Danilet and Stoian, 2017). Dr Gerald Zaltman first developed ZMET from Harvard Business School in the early 1990s. ZMET will reveal a mental model and will result in a consensus map. Ten steps must be accomplished in ZMET. The following is the steps taken in ZMET.

Figure 1: ZMET steps
Source: Hui Wu, Her Yan and Ming Shu (2018) Before conducting all ten steps above, the researcher first chose the participants. The participants in this study were nine SME entrepreneurs from different business backgrounds. Before the storytelling stage, participants were asked to collect ten images that best represented their thoughts and feelings towards taxes for SMEs. The participants were asked to collect these pictures within a week. A week later the participants met with the researcher (interviewer) to begin the ZMET process.
In the first stage, Story Telling, participants were asked to explain the reasons behind the selection of the pictures. The ten images were discussed in random order. From the stories revealed, researchers began to write some important words and also explored the veiled reasons behind participants' answers. In the second stage, Missed Images, participants were asked if there was a picture they could not find and what the image meant. In the third stage, Sorting Task, the participants were asked to arrange the pictures they brought into meaningful groups. Participants then gave a name or theme to each group.
In the fourth stage, Construct Elicitation, participants were involved in an in-depth interview process with the researchers. The laddering technique is used to find constructs and relationships between the constructs. The respondents' chosen images were used as stimuli to identify the constructs. In the fifth stage, The Opposite Image, participants were asked to describe the image they would look for if they were asked to refer an image that is considered to define a converse situation with the topic currently being studied. In the sixth stage, participants were asked to select a picture that best represented their opinion on the research topic.
In the seventh step, Sensory Image, participants were asked to represent the topic under study with the senses' functions. In the eighth step, the Mental Map or Summary Image, participants were asked to create a framework illustrating the relationships between the constructs found earlier. In the ninth stage, Summary Image, participants were asked to build a collage of pictures, showing the relationships between the images and connecting them to the framework from the previous stage. In the final step, Consensus Map, the researcher constructed a consensus map from the responses of all the participants.

Discussion
In the first step in ZMET, Story Telling, participants were asked to describe and explain the purpose of selecting their pictures. From the story presented by the participants, the researcher recorded some key and essential words. Besides, the researchers also dug deeper with further questions about the images. Here are some examples of pictures the participant brought along with the related construct a graphic description. Being chased "We (SMEs) are like the zebra, and the government is like the cheetah. The cheetah will chase us way faster than our ability to run." Burdening "Tax is a burden for me. I feel it very heavy. I still earn a little from my business. The tax is not supposed to be charged to me." Unfair "The tax imposed on MSMEs is unfair. We just learned to crawl, do not hinder us. If you want to impose a tax, put it on conglomerates. It is not fair that we are being pursued, while big business people are free. We remain small and poor, and they remain big and richer." In the second step of ZMET, Missed Image, all participants stated that there were no pictures they could not find to illustrate their perceptions of tax. That is, all images brought by participants fully represented their thoughts and feelings about taxes. In the third step of ZMET, the Sorting Task, participants were asked to group the images they considered similar in categories. In this stage, participants were required to name each group of drawings. Participant no. 1 for example, categorised the images into two categories: Current Conditions (tax implementation) and Ideal Conditions, while participant no. 2 classified the images into categories such as: Tax Burden, Tax Cruelty and Tax Rejection.
In the fourth stage, Construct Elicitation, researchers conducted a laddering process to gain an understanding of the abstraction constructed by the participants. There are several constructs identified by the researcher, namely: the originator construct, connector construct, and destination construct. In the fifth stage, The Most Representative Picture, participants choose which image they considered the most representative of their thoughts and feelings about taxes. Participant no. 9, for example, chose a picture of a government wasting public money and gave the following explanation: "The main reason I do not want to pay tax is because of them (pointing at picture).
The government, the legislative, those who are related to the power is mentally corrupted. They corrupted the income from tax, they did not realise that the tax was the sum of our ( In the seventh stage, Sensory Image, participants are asked to express their opinions regarding taxes through the representation of colour, sound, smell, taste, and touch. Here is participant no. 2 when asked to describe the tax "If like a sound, like a muffler, noisy. If taste, bitter. If a smell, the garbage, not good. If touch, a thorn, sharp and painful". Participant no. 4 described taxes as a colour follows, "The colour that is not clear. Not dark, not bright, but also unflattering (He then opened the laptop, opened the CorelDraw menu, and showed it to the researcher). Grey gradation colour of 50%, for example. Unclear, unpleasant views, just like taxes." In the eighth, ninth and tenth steps, the researcher created a mental map, interpreted the images from the participants' collages and built the consensus map. The consensus map was prepared through the codification process, determining higher-order constructs (deep metaphors) and the relationships between constructs. In constructing the consensus map, the researcher combined the results of the interview sessions, the correlation pictures from construct elicitation, mental image maps, and summary images.   Blackburn, et al (2018) stated that trust to external parties has been an issue for SMEs. In this finding, it including assurance to the government. It seems that acute corruption in tax official makes SMEs reluctant to pay taxes. The trust issues have been confirmed as many participants referred to one corruption case conducted by a senior tax official, Gayus Tambunan. Gayus represents SMEs imagination of tax body; rich and corrupt. Although he has been sentenced for years of imprisonment, he still can sneak out from the prison and live a luxurious life. In addition, SMEs did not believe that the government can properly manage the tax funds. This distrust of the person and system is represented by the four constructs that constitute it: robbery, corruption, theft, and bad management.

Misclassification
The next metaphor is Misclassified. Participants in this study argued that tax categorisation for the Micro, Small, Medium Enterprises (MSMEs) sector could not be equally imposed. The assets and turnover owned by micro, small, and medium enterprises are different, so, the tax obligations should be various. In micro and small companies, the owner is usually also the finance manager (Mansor and Hanefah, 2008), but medium-sized companies can hire their own tax staff. This misclassification makes micro and small entrepreneurs consider the tax "unfair" to them. The tax imposition of 1% of turnover is burdensome for micro and small enterprises, which carry out their business using the principle of "as long as there is a cash inflow and outflow". Unlike them, medium companies can distinguish revenue, profit, and costs to plan better for tax.

Mistreatment
Participants in this study assumed that the government made the wrong approach to them concerning tax. The method given is "stick" rather than "carrot". SMEs are being chased, undermined, and subjected to unpleasant treatment. The tax approach for SMEs, according to Eragabhe and Modugu (2014) should be "smooth". The government should act as a consultant and not as an executioner. Instead of "shooting" SMEs, the government should consider different approaches that enable both parties to sit down and talk together. With the existing approach, SMEs seem to be in "disgrace" if doing things that do not fit the tax rules. In fact, they are not intentionally avoiding tax, sometimes it is just because they do not know. They (SMEs) need more partners to consult and discuss. The Indonesian government, through Tax Directorate should consider the most appropriate way to gain trust and respect from SMEs. Arnaout and Esposito (2018) stated that communication strategy is vital for SMEs. In order to change SMEs' mindset, there must be different approach of communication.

Disincentive
SMEs perceived that there are too many types of tax which they did not understand. It confused them and thus, they considered it impractical and complicated. As a result, they become afraid when hearing about "tax" and they become resistant to tax. Huerta, et al (2017) stated that the owners of small business tend to control all the implementation of accounting and practices whether they have an accounting background. Blackburn, et al (2018) highlighted that many small businesses did not use professional accountant services, including tax services, due to trust issues. As a result, SMEs do not have qualified second opinions concerning to tax regulation. Regarding to tax rates, SMEs feel that the tariffs are overburdening them, so, instead of governments encouraging their businesses to grow, governments become inhibitors with the taxes imposed on them. These factors cause charges to be considered a disincentive for SMEs to grow.

Conclusion
This study aimed to explore SMEs' perceptions related to taxes. Using the ZMET method, it has been identified 24 constructs describing four deep metaphors. The four deep metaphors are Distrust of the Government, Misclassification, Mistreatment, and Disincentive. The government is perceived as the party that will use the tax money paid by SMEs corruptly. Several cases of corruption in state finances have further strengthened this perception. SMEs also perceived that there should be a different classification between the types of micro, small and medium enterprises. Therefore tax rates charged should be different. At this time, tax imposition on SMEs is considered not on target, because it focuses on small businesses which have only small-scale income. Tax treatment of SMEs is also considered to be using an inappropriate approach. Instead of acting as a consultant, the government positioned itself as executioner. It is like a proverbial dog barking up the wrong tree; the government has barked (tax collection efforts) up the wrong tree (SMEs). As a result, it will not earn the results expected by the government.