The UN Increase Phenomenon Threatens Regional Infrastructure Development

JAKARTA The increase in Land Taxes and Urban and Rural Buildings (PBB-P2) in a number of areas is the impact of the efficiency of fund transfers from the central government.

Tens of thousands of Pati residents demonstrated on Wednesday (12/8/2025) urging Regent Sudewo to resign from his position. This push back came after Sudewo raised the UN in its territory by 250 percent, although it has now been officially canceled after President Prabowo Subianto reprimanded him.

However, Pati is not the only area that has drastically raised the PBB.

In Cirebon, UN rates rose by 1,000 percent. According to a number of sources, since early 2024 the Cirebon Rainbow Association has been struggling to protest to criticize the UN's increasing policy in the region.

Meanwhile, in Semarang Regency, the UN increase reached 441 percent. This was experienced by a resident named Tukimah. He admitted that initially the PBB had only Rp. 161,000 but then jumped to Rp.872 thousand.

In Bone, South Sulawesi, a joint student held a demonstration to reject the increase in the UN which rose by 300 percent. They also protested the uneven increase in UN rates, as well as Bapenda which were considered less socialized and arbitrary.

A number of economists agree that the phenomenon of increasing the UN in a number of regions is due to the central government's policy of tightening the budget.

PBB-P2 is a tax on the earth and/or buildings owned, controlled, and/or utilized by individuals or entities, except for areas used for plantation, forestry and mining business activities.

The earth is defined as a surface of the earth which includes soil and inland waters. Meanwhile, buildings are engineering constructions that are planted or attached permanently above the earth's surface and below the earth's surface.

Law Number 1 of 2022 concerning Financial Relations between the Central Government and the Regional Government aka the HKPD Law regulates the basis for the imposition of the PBB-P2 is the Value of the Sale of Tax Objects (NJOP). However, the amount of NJOP is determined by each regional head.

Economist from the Bright Institute Muhammad Andri Perdana said that the cause of the increase in the UN in a number of regions could not be separated from the efficiency policy of the central government. Since 2016, said Andri, the percentage portion of transfers to the regions (TKD) has decreased until this year.

In 2016, TKD from the center was 38.1 percent of the entire State Revenue and Expenditure Budget (APBN). However, this figure is decreasing, and in 2025 only 25.4 percent of the APBN.

Even though all taxes in the regions have all entered the center. This 25 percent figure has not been cut by efficiency. So that implicitly this efficiency reduces the TKD budget," Andri said when contacted by VOI.

Andri added, areas with low local revenue (PAD) are very dependent on TKD, so when the funds are cut, the impact is felt.

To boost PAD in the midst of central government efficiency, increasing the UN is considered a relatively fast and easy instrument because it is based on adjusting the Tax Object Selling Value (NJOP) whose value is also determined by the local government itself.

Head of the Presidential Communication Office (PCO) Hasan Nasbi denied that the increase in the UN in a number of regions was due to the efficiency of the central government's budget. According to him, the increase is a purely local government policy.

This was conveyed at a press conference in Jakarta, Thursday, when confirmed regarding allegations of an increase in PBB-P2 in the regions as a direct impact of the central government's budget efficiency policy.

"When it comes to allegations that the things that have been done by several local governments are related to efficiency policies, we consider this a premature response," he said, citing Antara.

According to Hasan, the budget efficiency implemented since early 2025 applies to all 500 regencies/cities and all ministries/agencies at the central level so that it cannot be associated with one specific case in the regions.

"If there is a specific incident, such as in Pati Regency, this is purely local dynamics," he said.

However, Media Wahyudi Askar from the Center of Economic and Law Studies (CELIOS) emphasized that what is happening in the regions is part of the central government's policy, including those related to the budget.

President Prabowo Subianto has a number of priority programs, which to make it happen, include special allocation funds (DAK) and general allocation funds (DAU). Which is a problem, said the Media, when the budget is cut, the money does not spread down.

"Because it was taken and shifted to priority programs such as MBG, Danantara, Red and White Kopdes, People's School, for strategic programs that have not yet run optimally," he said.

"The money that should have been distributed to the regions was taken, so that the community's economy was depressed, purchasing power fell," he added.

The media added that what happened in Pati recently was the result of the economics of the collapsed regions, PAD was not optimal due to reckless, brutal, and inaccurate budget turnover.

"Even though the national economic growth originated from the regional economy," he explained.

"Our tax justice is questioned. What happened in Pati today is a warning not to make policies that blunder both at the city district and national government levels," he added.

Forcing the increase in PBB-P2 drastically, Andri Perdana explained that it is very burdensome for the community, especially in the regions. The short-term effect of protests such as what happened in Pati, as well as the possibility of a decrease in revenue because many are absent from paying taxes.

In the long term, it is not impossible for projects in stalled areas to have an impact on regional development itself

"If you look at the current turmoil, maybe the regent or mayor is afraid to raise taxes, as a result PAD is difficult to increase, regional development or infrastructure is hampered. In other words, the infrastructure project in the regions is sacrificed," he continued.

Andalas University economist Syafruddin Karimi said that the increase in PBB-P2 is actually not the only way. Local governments can optimize public service levies, manage regional assets productively, encourage cooperation in the use of strategic land, and spur BUMD's performance in order to generate larger dividends.

"These steps do take time and commitment, but the results are more sustainable and do not immediately suppress people's purchasing power," he concluded.