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

References

Affroumou, Tiemele Aristide. “(Re)understanding the Relationship between Fiscal Decentralization and Property Tax Revenue: Insights from Developing and Developed Countries.” Economic Change and Restructuring 58, no. 3 (2025): 1–48. https://doi.org/10.1007/s10644-025-09883-2.

Alm, James, Robert H. Aten, and Roy Bahl. “Can Indonesia Decentralise Successfully? Plans, Problems and Prospects.” Bulletin of Indonesian Economic Studies 37, no. 1 (2001): 83–102. https://doi.org/10.1080/000749101300046537.

Alm, James. “What Motivates Tax Compliance?” Journal of Economic Surveys 33, no. 2 (2019): 353–388. https://doi.org/10.1111/joes.12272.

Amyati, Amyati, and Sri Ratu Hikmawati. “Analisis Sistem dan Prosedur Pemungutan Pajak Daerah dalam Upaya Peningkatan Pendapatan Asli Daerah pada Badan Pelayanan Pajak Daerah.” Yudishtira Journal: Indonesian Journal of Finance and Strategy Inside 1, no. 2 (2021): 86–96. https://doi.org/10.53363/yud.v1i2.34.

Anderson, Nathan B. “Property Tax Limitations: An Interpretative Review.” National Tax Journal 59, no. 3 (2006): 685–694.

Asher, Mukul G. “The Role of Property Tax in Fiscal Decentralization in Indonesia.” Policy and Society 21, no. 2 (2002): 26–41. https://doi.org/10.1016/S1449-4035(02)70007-6.

Astuti, Wigi, and Yudea Yudea. “Analisis Laju Pertumbuhan Pajak Bumi dan Bangunan Perdesaan dan Perkotaan dan Kontribusinya terhadap Pendapatan Asli Daerah Kota Balikpapan.” Forum Ekonomi: Jurnal Ekonomi, Manajemen dan Akuntansi 18, no. 1 (2016). https://www.neliti.com/publications/55593/analisis-laju-pertumbuhan-pajak-bumi-dan-bangunan-perdesaan-dan-perkotaan-dan-ko.

Astuti, Wigi, and Yudea Yudea. “Analisis Laju Pertumbuhan Pajak Bumi dan Bangunan Perdesaan dan Perkotaan dan Kontribusinya terhadap Pendapatan Asli Daerah Kota Balikpapan.” Forum Ekonomi 18, no. 1 (2016). https://www.neliti.com/publications/55593/analisis-laju-pertumbuhan-pajak-bumi-dan-bangunan-perdesaan-dan-perkotaan-dan-ko.

Bahl, Roy, and Richard Bird. “Subnational Taxes in Developing Countries: The Way Forward.” Public Budgeting & Finance 28, no. 4 (2008): 1–25. https://doi.org/10.1111/j.1540-5850.2008.00914.x.

Berawi, Mohammed Ali, Mustika Sari, Adinda Alya Salsabila, Bambang Susantono, and Roy Woodhead. “Utilizing Building Information Modelling in the Tax Assessment Process of Apartment Buildings.” International Journal of Technology 13, no. 7 (2022): 1515–1526. https://doi.org/10.14716/ijtech.v13i7.6188.

Besley, Timothy, and Torsten Persson. “Why Do Developing Countries Tax So Little?” Journal of Economic Perspectives 28, no. 4 (2014): 99–120. https://doi.org/10.1257/jep.28.4.99.

Bird, Richard M. “Subnational Taxation in Developing Countries: A Review of the Literature.” Journal of International Commerce, Economics and Policy 2, no. 1 (2011): 139–161. https://doi.org/10.1142/S1793993311000269.

Caldeira, Thiago Costa Monteiro, Philipp Ehrl, and Tito Belchior Silva Moreira. “Fiscal decentralization and tax collection: evidence from the rural property tax in Brazil.” European Journal of Political Economy 78 (2023): 102396. https://doi.org/10.1016/j.ejpoleco.2023.102396.

Chapman, Jeffrey, and Evgenia Gorina. “Effects of the Form of Government and Property Tax Limits on Local Finance in the Context of Revenue and Expenditure Simultaneity.” Public Budgeting & Finance 32, no. 4 (2012): 19–45. https://doi.org/10.1111/j.1540-5850.2012.01022.x.

Devi, Ria Sintha, Novi Juli Rosani Zulkarnaen, and Rani Ika Pratiwi. “Tinjauan Yuridis terhadap Pajak Daerah dan Retribusi Daerah: Studi Pelaksanaan di Unit Pelayanan Pajak Daerah Samsat Kota Binjai.” Jurnal Rectum: Tinjauan Yuridis Penanganan Tindak Pidana 3, no. 2 (2021): 195–211. http://jurnal.darmaagung.ac.id/index.php/jurnalrectum/article/view/1177.

Fadila, A. Z., T. E. Jaya, and S. Nurmalita. “Analisis Efektivitas dan Kontribusi BPHTB dan PBB-P2 Terhadap PAD Kota Bekasi 2019-2024.” Jurnal Akuntansi, Perpajakan dan Auditing 7, no. 2 (2026): 242–257. https://doi.org/10.21009/japa.0702.04.

Fadila, Nazhira, Ratih Kusumastuti, and Riski Hernando. “Pengaruh efisiensi, efektivitas, dan kontribusi pajak bumi dan bangunan perdesaan dan perkotaan (PBB P-2) terhadap pendapatan asli daerah (PAD) kota jambi tahun 2019-2023.” Jurnal Akuntansi & Keuangan Unja 10, no. 1 (2025): 15–23. https://doi.org/10.22437/jaku.v10i01.45895.

Febriani, Ratna Kandi. “Pengaruh Kebijakan Sunset Policy dan Sosialisasi Pajak terhadap Kepatuhan Wajib Pajak Bumi dan Bangunan Kota Malang.” Undergraduate thesis, STIE Malangkucecwara, 2020. http://repository.stie-mce.ac.id/id/eprint/943.

Hartono, Arif, and Yeni Alvionita. “Analysis of Local Tax Efforts in Supporting Increasing Ponorogo Regency’s Original Local Government Revenue.” Ekuilibrium 16, no. 2 (2021): 164–175. https://doi.org/10.24269/ekuilibrium.v16i2.2021.pp164-175.

Hasanah, Nurhany, Masdar, Andi Chairil Furqan, and Tenripada. “Empirical Evidence on the Role of Local Own-Source Revenue in Strengthening Fiscal Independence of Indonesian Local Governments.” Owner: Riset dan Jurnal Akuntansi 9, no. 4 (2025): 2950–2963. https://doi.org/10.33395/owner.v9i4.2788.

Haurin, Donald R. “The Effect of Property Taxes on Urban Areas.” Journal of Urban Economics 7, no. 3 (1980): 384–396. https://doi.org/10.1016/0094-1190(80)90009-1.

Hummel, Daniel, and Bevaola Kusumasari. “Local Government Financial Performance and Decentralization in Indonesia.” State and Local Government Review 58, no. 2 (2026): 206–227. https://doi.org/10.1177/0160323X251364379.

Indonesia. Peraturan Pemerintah Nomor 12 Tahun 2019 tentang Pengelolaan Keuangan Daerah.

Indonesia. Undang-Undang Dasar Negara Republik Indonesia Tahun 1945.

Indonesia. Undang-Undang Nomor 1 Tahun 2022 tentang Hubungan Keuangan antara Pemerintah Pusat dan Pemerintahan Daerah.

Indonesia. Undang-Undang Nomor 28 Tahun 2009 tentang Pajak Daerah dan Retribusi Daerah.

Kelly, Roy. “Property Tax Reform in Indonesia: Emerging Challenges from Decentralisation.” Asia Pacific Journal of Public Administration 26, no. 1 (2004): 71–90. https://doi.org/10.1080/23276665.2004.10779286.

Kirchler, Erich, Erik Hoelzl, and Ingrid Wahl. “Enforced versus voluntary tax compliance: The ‘slippery slope’ framework.” Journal of Economic Psychology 29, no. 2 (2008): 210–225. https://doi.org/10.1016/j.joep.2007.05.004.

Kis-Katos, Krisztina, and Bambang Suharnoko Sjahrir. “The Impact of Fiscal and Political Decentralization on Local Public Investment in Indonesia.” Journal of Comparative Economics 45, no. 2 (2017): 344–365. https://doi.org/10.1016/j.jce.2017.03.003.

Kuncoro, Haryo. “Pengaruh Transfer antar Pemerintah pada Kinerja Fiskal Pemerintah Daerah Kota dan Kabupaten di Indonesia.” Economic Journal of Emerging Markets 9, no. 1 (2009). https://doi.org/10.20885/ejem.v9i1.624.

Lewis, Blane D. “Intergovernmental Fiscal Transfers and Local Incentives and Responses: The Case of Indonesia.” Fiscal Studies 38, no. 1 (2017): 111–139. https://doi.org/10.1111/1475-5890.12080.

Mudayen, Y. M. V., and H. Maridjo. “The Impacts of Fiscal Decentralization, Institutional Transformation, and Regional Revenue on Income Disparities between Provinces in Indonesia.” Journal of Economics, Business, and Accountancy Ventura 20, no. 3 (2018): 247–259. https://doi.org/10.14414/jebav.v20i2.878.

Nikmatika, Luluk Fadliyanti, and Baiq Saripta Wijimulawiani. “Analisis Potensi dan Kontribusi Penerimaan Pajak Bumi dan Bangunan Perdesaan dan Perkotaan (PBB-P2) terhadap Pendapatan Asli Daerah (PAD) di Kota Mataram Tahun 2015–2020.” Jurnal Konstanta 3, no. 1 (2024): 137–155. https://doi.org/10.29303/konstanta.v3i1.1105.

Nilawati, Evi. “Analisis dan Strategi Peningkatan Pendapatan Asli Daerah (PAD) di Kabupaten Gunungkidul.” Jurnal Maksipreneur: Manajemen, Koperasi, dan Entrepreneurship 9, no. 1 (2019): 41. https://doi.org/10.30588/jmp.v9i1.469.

Noviyanti, and Fauziah Zen. “Pengaruh Penerapan Sistem Closed List dan Penambahan Jenis Pajak Daerah terhadap Upaya Pemungutan Pajak Daerah.” Indonesian Treasury Review 7, no. 1 (2022). https://doi.org/10.33105/itrev.v7i1.527.

Nurrochman, and Oktavilia. “Determinant Analysis of Fiscal Decentralization in Indonesia.” Efficient 7, no. 2 (2024): 130–140. https://doi.org/10.15294/efficient.v7i2.1879.

Oates, Wallace E. “An Essay on Fiscal Federalism.” Journal of Economic Literature 37, no. 3 (1999): 1120–1149. https://doi.org/10.1257/jel.37.3.1120.

Oates, Wallace E. “Property Taxation and Local Public Spending: The Renter Effect.” Journal of Urban Economics 57, no. 3 (2005): 419–431. https://doi.org/10.1016/j.jue.2004.12.006.

Oates, Wallace E., and William A. Fischel. “Are Local Property Taxes Regressive, Progressive, or What?” National Tax Journal 69, no. 2 (2016): 415–434.

Pal, Sarmistha, and Zaki Wahhaj. “Fiscal Decentralisation, Local Institutions and Public Good Provision: Evidence from Indonesia.” Journal of Comparative Economics 45, no. 2 (2017): 383–409. https://doi.org/10.1016/j.jce.2016.07.004.

Peraturan Pemerintah Nomor 35 Tahun 2023 tentang Ketentuan Umum Pajak Daerah dan Retribusi Daerah.

Pomeranz, Dina. “No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax.” American Economic Review 105, no. 8 (2015): 2539–2569. https://doi.org/10.1257/aer.20130393.

Pramanda, Andri Arif, Citra Sukmadilaga, and Ivan Yudianto. “Menakar Local Taxing Power Menggunakan Analisis Subnational Tax Effort: Studi pada Kabupaten/Kota di Provinsi Jawa Barat.” Jurnal Akuntansi 18, no. 1 (2023): 20–35. http://jurnal.unsil.ac.id/index.php/jak.

Rahmadoni, Firman, Marlina Safitri, Suparlan, Reniati, Rini Luciani Rahayu, and Muhammad Qomaruddin Ridwan. “The Mapping of Regional Tax and Levy in Pangkalpinang.” Jurnal Bina Praja 14 (2022): 301–313. https://doi.org/10.21787/jbp.14.2022.301-313.

Ramadhan, Devids. “Efektifitas Penerimaan Pajak Bumi Dan Bangunan Pedesaan dan Perkotaan (PBB-P2) Di Bapenda Kota Padang.” Jurnal Riset Akuntansi, Perpajakan dan Auditing 1, no. 3 (2024): 132–138. https://doi.org/10.62194/y38y8072.

Safitri, Putri Apriliani Rahmah, Galih Wicaksono, and Nurcahyaning Dwi Kusumaningrum. “Effectiveness Analysis of the Land and Building Tax of Rural and Urban Areas (PBB-P2) Contribution to Local Own-Source Revenue (PAD) of Tuban Regency.” International Journal of Multidisciplinary Research and Literature 1, no. 1 (2022): 7–13. https://doi.org/10.53067/ijomral.v1i1.1.

Sah, Fitran, Novi Winarti, and Ardi Putra. “Efektivitas Program E-Payment One Stop Service dalam Menunjang Pemungutan Pajak Bumi dan Bangunan di Kabupaten Karimun.” Tuturan: Jurnal Ilmu Komunikasi, Sosial dan Humaniora 3, no. 1 (2025): 101–18. https://e-journal.nalanda.ac.id/index.php/TUTURAN/article/view/1467.

Sari, Sirwinda Ariany, A. Dahri Adi Parta Ls, and Sofyan Syamsuddin. “Efektivitas Penerimaan Pajak Bumi dan Bangunan Perdesaan dan Perkotaan (PBB-P2) Terhadap Pendapatan Asli Daerah Kota Palopo.” Permana: Jurnal Perpajakan, Manajemen, dan Akuntansi 17, no. 3 (2025): 28–38. https://doi.org/10.24905/permana.v17i3.766.

Seifert, Jan, and Hui Li. “Indonesia’s Fiscal Decentralization and its Effect on Provincial Public Finances.” Public Finance and Management 15, no. 2 (2015): 108–129. https://doi.org/10.1177/152397211501500202.

Septiyana, Rizni, Ahmad Baihaqi, and Anna Maryati. “Implementasi Peraturan Daerah Kabupaten Hulu Sungai Tengah Nomor 7 Tahun 2020 tentang Pajak Bumi dan Bangunan Perdesaan dan Perkotaan di Kabupaten Hulu Sungai Tengah.” Al Iidara Balad 6, no. 2 (2025): 897–907. https://ejurnal.stiaamuntai.ac.id/index.php/aliidarabalad/article/view/958.

Silver, Christopher, Iwan J. Azis, and Larry Schroeder. “Intergovernmental Transfers and Decentralisation in Indonesia.” Bulletin of Indonesian Economic Studies 37, no. 3 (2001): 345–362. https://doi.org/10.1080/00074910152669172.

Smoke, Paul, and Blane D. Lewis. “Fiscal Decentralization in Indonesia: A New Approach to an Old Idea.” World Development 24, no. 8 (1996): 1281–1299. https://doi.org/10.1016/0305-750X(96)00042-3.

Sofilda, Eleonora, Muhammad Zilal Hamzah, and Suhal Kusairi. “Analysis of Fiscal Decentralisation, Human Development, and Regional Economic Growth in Indonesia.” Cogent Economics & Finance 11, no. 1 (2023): 2220520. https://doi.org/10.1080/23322039.2023.2220520.

Sugiharti, Dewi Kania, Faqih Lutfi, and Holyness N. Singadimedja. “Pajak Bumi dan Bangunan Yayasan Pendidikan dalam Pengembangan Pendidikan Nasional.” Jurnal Poros Hukum Padjadjaran 1, no. 2 (2020): 262–282. https://doi.org/10.23920/jphp.v1i2.233.

Tang, Bo-sin, Siu-wai Wong, and Sing-cheong Liu. “Institutions, Property Taxation and Local Government Finance in China.” Urban Studies 48, no. 5 (2011): 847–875. https://doi.org/10.1177/0042098010363497.

von Haldenwang, Christian. “The Political Cost of Local Revenue Mobilization: Decentralization of the Property Tax in Indonesia.” Public Finance and Management 17, no. 2 (2017): 124–151. https://doi.org/10.1177/152397211701700202.

Weol, Febriano, Harijanto Sabijono, and Syermi S.E. Mintalangi. “Efektivitas Penerimaan Pajak Bumi dan Bangunan Perdesaan dan Perkotaan di Kelurahan Sario Kota Manado.” Jurnal EMBA 11, no. 3 (2023): 840–847. https://doi.org/10.35794/emba.v11i3.50343.

Yang, Chin-Wei, Dwight B. Means Jr., and George E. Moody. “Tax Rates and Total Tax Revenues From Local Property Taxes.” Public Finance Review 21, no. 4 (1993): 355–377. https://doi.org/10.1177/109114219302100401.

Zevaya, Faradina, Manuel David Cruz, Fauzi Syafriel, Rita Purnama Sari, and Ridho Syahputra. “Examining How Macroeconomic Variables Influence Regional Autonomy: An Examination of Local Taxing Power.” The Journal of Indonesia Sustainable Development Planning 5, no. 1 (2024): 54–66. https://doi.org/10.46456/jisdep.v5i1.533.

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