THE IMPACT OF 12% VAT ON STUDENTS' PURCHASE INTENTION: THE ROLE OF TAX KNOWLEDGE, PRICE SENSITIVITY, AND PRODUCT CATEGORIZATION

Abstract

This study aims to analyze the influence of tax knowledge, price sensitivity, and product categorization on university students’ purchase intention in Purwokerto in response to the planned implementation of the 12% Value Added Tax (VAT) policy. Using a quantitative method with multiple linear regression analysis, this research examines how these three factors interact in shaping consumer behavior amid fiscal pressure. The findings indicate that tax knowledge has a positive and significant effect on purchase intention, suggesting that fiscal literacy functions as a cognitive resilience mechanism among university students. In contrast, price sensitivity has a negative and significant effect, confirming that students, as a group with relatively fixed income, are highly responsive to price changes. Interestingly, product categorization was found to have no significant effect, implying that the systemic and comprehensive impact of taxation policies has blurred consumers’ perceptions regarding product category differences in purchasing decision-making.
Theoretically, this study expands the consumer behavior literature by highlighting the role of tax literacy as a vital cognitive determinant. Practically, the findings suggest that business actors should shift from conventional product segmentation strategies toward value-based communication approaches in order to maintain retail transaction stability amid fluctuations in national taxation policies.