The Role of Property Tax in Fiscal Decentralization in Indonesia

Indonesia has embarked on a decentralization process with potentially far reaching implications for its fiscal system and political economy. This paper examines the role of property tax in fiscal decentralization in Indonesia. Currently, the property tax is essentially a central tax as far as design, valuation, collection (target based), and administration are concerned. The net revenue is fully shared with provinces and districts, though the basis of sharing is not fully transparent. This paper suggests that in order to increase the share of own-revenues of the regions, policymakers may consider permitting greater discretion to districts to set effective property tax rates, within the overall limits set by the central government. It is suggested that centralized administration be retained. Transforming property tax into a truly local tax, including local responsibility for valuation, is not currently recommended, but could be kept as a key long-term goal

Ad valorem tax · Business · Decentralization · Discretion · Economic policy · Economics · fiscal federalism · Indirect tax · Local government · Market economy · Political science · Property tax · Public economics · Revenue · Tax reform · Tax revenue · Valuation (finance · Value-added tax · Economic Growth and Fiscal Policies · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Public Administration · Finance

• Intergovernmental Transfers and Decentralisation in Indonesia

  Christopher Silver, Iwan J Azis et al.•Bulletin of Indonesian Economic…•2001

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