Analysis of the Impact of Property and Land Tax Abolition on Regional Revenue in Indonesia

Aditiya Aditiya; Ahmad Ahmad

doi:10.33756/eslaj.v8i2.32925

Analysis of the Impact of Property and Land Tax Abolition on Regional Revenue in Indonesia

Aditiya Aditiya, Ahmad Ahmad

Abstract

Proposals to abolish the Rural and Urban Land and Building Tax (Pajak Bumi dan Bangunan Perdesaan dan Perkotaan or PBB-P2) have entered Indonesian fiscal debate as a measure of tax relief, yet their legal consequences for regional own-source revenue (Pendapatan Asli Daerah or PAD) remain largely unexamined. Existing scholarship documents PBB-P2 collection performance and its contribution to PAD, but does not address what legal instruments abolition would require or how the forgone revenue could be replaced. This study asks three questions: what constitutional and statutory position PBB-P2 occupies within the regional fiscal framework; what legal consequences abolition would produce for regional autonomy and public service obligations; and what instruments could compensate for the loss. Using doctrinal legal research with statutory and conceptual approaches, the study analyses Article 23A and Article 18A(2) of the 1945 Constitution, Law No. 1 of 2022 on Financial Relations between Central and Regional Government, and the regional financial management framework. It argues that abolition would require statutory amendment rather than administrative action, would narrow the constitutional commitment to fiscal decentralisation, and would displace a statutory relief mechanism already available. Targeted exemption is proposed as the proportionate alternative.

Keywords

Fiscal Decentralisation; Land and Building Tax; Local Taxation; Regional Own-Source Revenue; Tax Abolition

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DOI: https://doi.org/10.33756/eslaj.v8i2.32925