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International Handbook of Land and Property Taxation

Edited by Richard M. Bird and Enid Slack

This comprehensive Handbook explores case studies of land and property taxation in 25 countries (five in each of five regions – OECD, central and eastern Europe, Asia, Africa, and Latin America), and focuses on the potential contributions of the property tax to the revenues of urban and rural governments and to more efficient land use.
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Chapter 9: Property Taxation in Indonesia

Roy Kelly


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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