Considering the Significance of Taxation in Improving the Welfare of Contemporary Society: Narratives from Students at the State Islamic University

Abstract

Taxation plays a vital role in state financing and public welfare, yet its legitimacy, collection mechanisms and the distribution of its benefits are still understood in diverse ways by Indonesia’s Muslim community. Within the context of Muslim society, the relationship between the state’s fiscal obligations, Islamic values, public trust and the equitable distribution of tax benefits raises complex socio-legal issues in contemporary Indonesia. This study focuses on analysing State Islamic University students’ interpretations of the role of taxation, the contemporary collection system, and its contribution to the welfare of contemporary Indonesian society in an integrated manner. The research employs a qualitative design utilising descriptive data and the interpretation of social reality to gain an in-depth understanding of the perceptions of students from the Faculty of Islamic Economics and Business regarding the Indonesian tax system. Data sources comprised primary data from students and secondary data from relevant literature, obtained through observation, interviews, documentation, and systematic literature reviews. The data were analysed qualitatively through grouping, categorisation, synthesis, pattern identification, and thematic interpretation to establish a deep connection between the informants’ views and issues of taxation and public welfare. The findings indicate that students understand early Islamic fiscal systems as comprising a diverse range of instruments; consequently, modern taxation is not directly equivalent to zakat, jizyah, kharaj, ushr and nawaib. They assess the effectiveness of contemporary tax collection as dependent on fiscal literacy, legitimacy, transparency, accountability, technology, clarity of regulations, and the quality of public services provided by the state to the public as taxpayers. Consequently, taxation is viewed as capable of enhancing welfare through development and public services; however, its benefits are conditional upon equity, oversight, transparency, and the appropriate allocation of state revenue. Further research should expand the sample, compare several State Islamic Universities, and combine qualitative and quantitative data to examine fiscal legitimacy and perceptions of public welfare in Indonesia.