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House passes law on regional fiscal management
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Finance Minister Sri Mulyani Indrawati explains the Harmonized Tax Law (HPP) to the public and business associations in Nusa Dua, Bali, on Nov. 19. (Finance Ministry/Tax office's public relation)
T
he House of Representatives approved a bill on Tuesday to overhaul regional budget management, which it has deemed inefficient in both spending and revenue collection.
The law on fiscal relations between the central government and regions (HKPD Law) aims to simplify and expedite spending at the regional administration level. The government expects the law to help regional leaders collect revenue and issue debt so as to better fund their own budgets without relying on state transfers.
The newly passed law amends the Center-Regions Fiscal Balance Law, the Regional Tax and Fees Law and Article 114 of the Job Creation Law. It provides for a five-year transition period.
"I ask all members at this second-tier meeting again: Can we agree to pass the bill into law?” asked Gerindra Party member and House Deputy Speaker Sufmi Dasco Ahmad a at a live-broadcast plenary session in Jakarta on Tuesday, before rapping his gavel on the podium.
Eight of the nine parties at the House agreed to pass the bill, with the Prosperous Justice Party (PKS) withholding its support, as it had done with the previously passed Harmonized Tax Law (HPP).
Read also: House passes 2022 state budget with 4.85% deficit
Finance Minister Sri Mulyani Indrawati said on Tuesday that the law reduced the number of regional tax categories from 16 to 14 and lowered the number of fees and charges from 32 to 18. Sri Mulyani promised the changes would improve revenue collection, noting that only a quarter of the regional budget was currently funded by the region's own revenue.
