Relatively Low, Local Tax Ratio is Only 1.3%

Thursday, 19 October 2023

Relatively Low, Local Tax Ratio is Only 1.3%

JAKARTA. The local tax ratio in 2022 was only recorded at 1.3%. This percentage is the ratio between local tax revenue collected to the value of Gross Domestic Product (GDP).

This figure is considered low because the government expected that the local tax ratio could at least reach 2%. Therefore, it needs to be improved immediately, one of which is through the implementation of the Law on Fiscal Relations between the Central Government and Regions (HKPD).

Quoting, the regions with local tax ratio values above 3% are only Bali and Nusa Tenggara, which amounted to 3.23%. While other regions are still below this figure.

In fact, some are below 1%, such as East Kalimantan whose local tax ratio is only 0.32% compared to the value of Gross Regional Domestic Product (PDRB).

Even though it is hoped that the tax ratio will increase, each regional government is instructed to pay attention to its impact on economic conditions. For example, by increasing tariffs.

On the other hand, the policies taken must be long-term, not just to pursue revenue targets in the short term.

For information, each region has the authority to collect taxes and levies as one of their sources of income. For example, the imposition of tax on parking, the urban and rural and and building tax (PBB-P2), restaurant tax, entertainment tax and others. (ASP/KEN)


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