Since 2011, Government of Indonesia launched a new regulation about transferring the authority of collection of Land and Property Acquirement Ownership Fees (BPHTB) and The Urban and Rural Property Tax (PBB-P2) from the Central Government to the Local Government. This policy is the embodiment of the decentralization era since 1999. After long discussion for 10 years, Central Government is now ready to give the authority for the Local Government to collect and manage the property taxes as their own sources of revenue. For this purpose, the transfer for two components of property taxes which are BPHTB and PBB-P2 as local government authority is regulated under Law No.28/2009 on Local Government Tax and Fees. However, this process will not go smoothly as predicted. Both Central and Local Government will face the challenges which can suppress the authority transfer.
This paper aims to analyze the impact of the tax authority transfer, the challenges that the local government should address, as well as the action that local government should take as the solution of the challenges.
Background:
Property Taxes in Indonesia
Property taxes in Indonesia is known as Pajak Bumi dan Bangunan-PBB (Land and building tax). It is levied upon the capital value of land and building. The tax liability is defined broadly to fall upon either the owner and/or beneficiary of the land and/or building. Property taxes in Indonesia is regulated under law No. 12/1994. According to object of taxes, Land and Building Tax consist of:
1. Land And Building Tax (PBB)
1. Urban and Villages (PBB-P2)
2. Forestry
3. Mining
4. Agriculture
2. Land and Property Acquirement Ownership Fees (BPHTB)
Collection
Previously, collection of property taxes is deconcentrated ...
... middle of paper ...
... InterScience
Mikesell, J. 2011. Fiscal administration. Boston, Mass.: Wadsworth/Cencage Learning
The Republic of Indonesia, 2009. Law Number 28/ 2009 on Local Government Tax and Fees
The Republic of Indonesia, 1994. Law Number 12/2004 on Property Taxes
The Republic of Indonesia, 2013. Financial Note and Indonesia Budget Fiscal Year 2013.
Online References:
Pendaerahan PBB http://www.bppk.depkeu.go.id/webpajak/index.php/artikel/ok-pbb/1082-pendaerahan-pbb (accessed: 13 November 2013)
Meninjau Kembali Pemekaran Wilayah (Daerah Otonom Baru) http://otda.bappenas.go.id/index.php?option=com_content&view=article&id=124%3Apemekaran-wilayah-dob&catid=1%3Alatest-news&lang=in (accessed: 10 November 2013)
Why Civil Servants Neutrality is A Must http://www.thejakartapost.com/news/2001/01/12/why-civil-servants039-neutrality-a-must.html (accessed: 10 November 2013)
Compensation must be provided to the person whose property is being bought. Each country should work to set a standard for what is a fair market price, to prevent any people from inadequate compensation. The value of the property must be taken into account, and the effect this will have on their way of life. If a person is, for example, losing their home, the government must provide enough money to ensure that individual is able to relocate comfortably.
Rifin, A. (2010). The Effect of Export Tax on Indonesia’s Crude Palm Oil (CPO) Export Competitiveness. ASEAN Economic Bulletin, 27(2), 173–84.
Hoffman, et al. South-Western federal taxation: comprehensive volume. 2014 ed. Mason, OH: South-Western Cengage Learning, 2014.
...t of Fort Bend in southeast Texas, the property tax is $1.30 per taxable asset value. This revenue makes up 52% of the budget for the district (Fort Bend ISD, 2010). A loss of even a little property tax revenue would hurt the district’s budget and affect the loss of many teaching jobs.
Prior to 1978, local governments maintained a great deal of freedom in budgeting. The majority of revenue for local governments came from property taxes. They were able to set their own property tax rates based on revenue needs and meet the service demands of residents while avoiding budget deficits. However, the adoption of Proposition 13 in 1978 put a major constraint on property tax as a source of revenue. The impact was felt much more in counties than cities, as property tax made up around two-thirds of revenue (Cummins 2014, 233). Counties lost substantial control of their major fiscal resources to fund police and other law enforcement services, fire protection, parks, libraries, schools, hospitals and public health. California cities
There have been calls from the public to limit the ability of municipalities to reassess and hence raise the property taxes. This has arguably inhibited the ability of local government to utilize these taxes to the maximum. The visibility and volatility nature of this tax has been cited as the main reason for the unpopularity of this tax among taxpayers . Unpopularity is one of the major problems of this tax system. Property tax is considered to be a visible tax. This means that tax payer know exactly what amount of tax they pay and hence demand an equivalent amount of service from their municipalities. The tax is visible because it is paid in lump sum unlike other taxes that are withheld at the source (income tax) or paid in small amount after each purchase (sales tax) . Similarly, the tax is used to fund services such as garbage collection, road maintenance, policing, among others. These services are very visible and hence tax payer...
In today’s real estate market there is one sensitive issues that has been debated on over the years regarding, zoning and rezoning laws and whether the home owners and investors should receive a compensation for every property affected by the zoning. The zoning laws has been known to either decreases or increases the value of a property. According to David Ling zoning is the regulation on a land use by dividing the community into various parts namely: Residential, commercial, industrial and other districts. (C.Ling, 2015)
Preceding the review there are several key terms that must be explained. Bonds are the most common way for a city or county to generate the needed money that is a debt investment in which an investor loans money to an entity that borrows the funds for a defined period of time at a fixed interest rate (Sawyer, 2006). Hard Taxes include taxes on income, real estate, personal property and general sales. Hard taxes frequently entail voter’s authorization, because the burden of payment fall direct...
Taxation is a compulsory levy imposed on the income, value of goods and services of individuals, partners and companies by the government. It is can be said to be an approach of imposing tax on the citizen. This imposition of tax, is expected to yield income which should be utilized in the provision of both basic and substantial infrastructural amenities, both social and security, as well as creates conditions for the economic well-being of the society at large.
In Malaysia, the land tax must be fully paid from 1st January each year and will be in arrears on 1st June each year. Land tax must be paid once a year to the State Authority. The annual tax rate calculated based on the land area (in square meters), real terms, categories and classes of land. Land tax payments can be made online and manually. Land tax payment through online will be given a 5% discount. Percentage of tax collection through online in Melaka increased and vice versa for manually way from April until August 2013. In April, the percentage achievement of assessment fees online is 0.27% and continued to rise to 1.19% in August while percentage of land tax collection manual in April was further reduced to 99.73% and 98.81% in August (Pejabat Tanah dan Galian Negeri Melaka, n.d.).
On the one hand, participatory approach to land use planning can provide openings for the decentralized administration of land management and enhance legal protection of local land rights through contributing to formal recognition of existing land tenure systems. According to Chigbu et al, (2015) four functions of land use planning that directly links to tenure security. (1) Its capacity to identify or determine land areas, parcels and uses and users. (2) Its propensity to enable documentation of land areas, parcels, rights, restrictions and responsibilities. (3) The opportunities it provides for stakeholder involvement, compensation of claims and community participation. (4) Its impact on land value, land markets and credit opportunities. On the other hand, land use planning, promoting sustainable natural resource use and environmental management are generally part of the mandate of local governments. And these prerogatives often tend to be weakly developed, both legally and with respect to capacity building and methodology (Hilhorst 2010). Unclear property rights and tenure insecurity are the major constraints to the potential of successful land use planning. According to UN-Habitat (2008, p. 17), poor land use planning associated with insecurity of tenure and incompletely specified land rights leads to problems of air and water-borne pollution from agricultural and industrial land use. Though there is a
The Goods and Services Tax, or GST for short, is defined as the multi-staged tax consumption on goods and services (GST, 2015). It is the tax that is only charged on the supply of goods and services made in the course of running a business locally by a registered, or taxable, person (Boey, 2015). Replacing a country’s current tax is one of the purpose of the implementation of GST in some countries. For instance, Malaysia’s SST (Sales and Services Tax) is abolished with the new implementation of GST. GST is an ample of consumption tax that covers the stages of economic activity. There are three stages of economy activity, namely the primary sectors, secondary sectors, and tertiary sectors (Borrington & Stimpson, 2014). In other words, all sectors are affected by GST’s implementation. For example, the woodcutter sells each tree for RM 50, the manufacturer buys one and pays the woodcutter RM 53 (RM 50 + 6% GST), and the woodcutter keeps the RM 50 and gives RM 3 to the tax collector.
...h municipalities. A simultaneous establishment of municipalities across the country requires more and more tangible materials to build them. This means that national budget that needs to be allocated for resources and materials in building constructions and setting up administration will be a vast amount.
Taxation is among the ways in which government can lessen income inequalities. Taxes is done in order to correct the over allocation of resources associated with negative externalities. Taxation is a method of transferring resources from the private to public sector. In the early centuries of Islamic State, only zakat was collected from Muslim and Islamic Tax was introduced by Caliph Umar Al-Khattab which is imposed to non-Muslim. The purpose of this report is to differentiate between conventional taxes and Islamic taxes.
This research will determine the effectiveness of putting incentives on tax policies in the level of tax collection of Baguio city. Its efficiency will be evaluated through the use of cost-benefit analysis, which will weigh the level of costs and benefits for the possibility of a profit for the community. As the increase in tax revenues reveal the activeness in political and economic activities of the people, it also serves as a driver in development and growth. While most of the city’s revenues come from business establishments, economic enterprises and real property according to the city Treasurer, it is intriguing how the city manages to reach their target tax collection and continue to increase their registered business permits. Incentives can be in the form of individual or corporate tax incentives, which can include deductions, benefits, etc., which will likely influence the trend of tax collection in a period of time.