Sri Mulyani Says Local Government Still Depends On Central Government Finances

Minister of Finance Sri Mulyani (Photo: Antara)

JAKARTA - Finance Minister Sri Mulyani Indrawati said that the Regional Government still relies heavily on the finances of the Central Government. Therefore, her party continues to synchronize central and regional policies by building a Standard Account Bagan (BAS) through the use of digital platforms.

"One of the challenges of local governments is the very large dependence on central finance. So that transfer transfers to Regions and Village Funds (TKDD) are a very dominant part," said Sri Mulyani at the National Coordination Meeting for the Acceleration and Expansion of Regional Digitalization (P2DD) at Hotel Indonesia Kempinski, Monday, September 23.

Sri Mulyani said that regional income through regional revenue is currently still very limited. Therefore, the Government issued Law Number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments (HKPD) which will strengthen local governments in order to have local taxi power or regional taxation.

"The HKPD Law also strengthens local governments to have local taxi power that can be increased and this is in line with our interest for all regions in Indonesia," he said,

Sri Mulyani explained that this local taxi power was carried out by continuing to identify potential regional income through regional taxes and levies, but at the same time local governments also maintain the investment climate.

"The ratio of this local tax has increased to a level of 3 percent, we hope to reach 300 percent from the current local taxi power which is only at the level of 1.3 percent," he added.

Sri Mulyani hopes that this increase will certainly not reduce the enthusiasm of investment in each region, but rather create governance that is able to create strong local governments.

"Our intervention through regional tax policies is carried out through improved instruments through tariff policies, tax objects, as well as carrying out motor vehicle tax operations and changing costs for motorized vehicle names," he said.