Privileges Obtained By The District Through The HKPD Law

Finance Minister Sri Mulyani (left) at the Senayan Parliament Complex, Jakarta. (Photo: Doc. Ministry of Finance)

JAKARTA - The Plenary Session of the House of Representatives (DPR) has approved the Draft Law on Financial Relations between the Central Government and Regional Governments (RUU HKPD) into law. The government represented by the Minister of Finance (Menkeu) said that this step was a strategy in strengthening the quality of fiscal decentralization in the regions.

"We believe that this excellent discussion process will make the HKPD Law an important component in fiscal reform," said the Minister of Finance at a press conference at the Senayan Parliament Complex, Jakarta, Tuesday, December 7.

In her explanation, the state treasurer revealed that there were a number of benefits that local governments (Pemda) would get when this regulation was officially enacted. So what are these things? The following was stated by the Minister of Finance Sri Mulyani.

1. Provision of Revenue Sharing Funds (DBH) to regions located on the border

2. The distribution of the DBH portion is adjusted to the realization of the previous year

3. The share of DBH excise on tobacco products increased from 2 percent to 3 percent

4. Increase in DBH for regions for land and building tax (PBB) levies from the previous 90 percent to 100 percent

5. Opening of DBH options based on oil palm plantations

6. The option to collect motor vehicle taxes and transfer fees for motorized vehicles carried out between provinces and cities is considered to be able to raise regional income without burdening the community.

For information, the Minister of Finance claims that changes to several DBH schemes will increase the budget allocation channeled to the regions by 2.74 percent or around 2.97 trillion from IDR 108.2 trillion to IDR 111.17 trillion.

Then, in the changes in this Law, regions will increase Regional Taxes and Levies or PDRD at the district/city level very high, from IDR 61.2 to IDR 91.2 trillion, or an increase of 50 percent.

Meanwhile, the implementation of the HKPD Law has a transition period of up to five years which will then be regulated through a derivative regulation, namely Government Regulation (PP).

In detail, General Allocation Fund (DAU) and DBH will be implemented starting in 2023. For regional taxes and regional levies, they will be implemented no later than two years after this Law is enacted.

Then, for motor vehicle tax options and transfer fees for motorized vehicles no later than three years after this Law is enacted. Meanwhile, Government Regulations (PP) derived from HKPD regulations must be enacted two years after the HKPD Law is enacted.