The ‘Big Bang’ Program and its Economic Consequences
- Studies in Fiscal Federalism and State–local Finance series
Edited by James Alm, Jorge Martinez-Vazquez and Sri Mulyani Indrawati
Chapter 6: Local tax Revenue Mobilization in Indonesia’s Decentralizing Era
Robert A. Simanjuntak and B. Raksaka Mahi INTRODUCTION One crucial element of any system of local government is the power to tax the local population in order to ﬁnance the provision of local services. Regional governments often regard the proportion of local taxes and charges in their total budget revenue as the main indicator of the degree of local autonomy they enjoy. The larger the taxing power, the larger the proportion of own-source revenue in the total budget, and the more autonomous they are. Nowadays many local government ofﬁcials in Indonesia share this view. However, the local tax base in Indonesia has been unsatisfactory for many years; that is, it is not yielding sufﬁcient revenue, or its incidence is perceived as unfair. The evidence presented in Tables 6.1 to 6.3 shows that during the 1990s, for the majority of the provinces, own-source revenue represented less than 30 percent of their total budgets. The situation had been even less satisfactory for districts/municipalities. The implementation of regional autonomy since January 1, 2001 has had practically no effect in this situation. (see Tables 6.1–6.3.) The local revenue problems can also be seen from the consolidated central and local governments budget. During the 1990s, regional governments raised only about 7 percent of total government revenues, which ﬁnanced only about one-third of their expenditures. In the ﬁrst year of regional autonomy implementation (2001), the situation was generally similar, with regional governments raising only about 8.29 percent of total government revenues, while their...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.