Edited by Richard M. Bird and Enid Slack
Chapter 9: Property Taxation in Indonesia
Roy Kelly The Republic of Indonesia, with a population of over 230 million, is the world’s largest archipelago nation, consisting of over 17 000 islands, which straddle the equator, stretching 4500 km across the Indian and Paciﬁc Oceans. Indonesia is a unitary country, with two levels of local government: Level I regional government consists of 27 provinces, two special regions and the capital city of Jakarta, while Level II regional government consists of 357 districts (regencies). Under the recent decentralization reforms in 2001, the 357 Level II districts are now the key administrative units for providing most government services. Under the Level II governments, Indonesia is organized into 4000 sub-districts (kecamatan) and 70 000 villages. Role of property taxes in Indonesia1 Property taxes in Indonesia in FY 2001 generated about Rp 5.3 trillion (or approximately US$530 million). In 2001, property taxes represented 0.35 percent of GDP, 2.9 percent of total government tax revenues and roughly 11 percent of local government revenues. The property tax in Indonesia is structured as a central government tax, whose revenues are shared with the local governments. As such, the property tax plays an important role in local government ﬁnance. As Table 9.1 indicates, the property tax has increasingly become a more important source of own revenues at both levels of local government. The property tax provided about two-thirds of all local-level tax revenues (67 percent), 50 percent of non-grant revenue and 11 percent of total local revenues in 1999–2000. At the provincial...
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