The Importance Of Transparency And Socialization In The Policy For Tax Levy In The Regions

JAKARTA Wednesday, August 13, 2025, a massive demonstration was held in Pati. This action is the result of controversial policies set by the Regent of Pati, Sudewo, one of which is the policy of increasing the levy of Rural and Urban Land and Building Tax (PBB-P2) to 250 percent.

The tax increase policy was taken after the regent held a meeting with the sub-district heads and members of the Pati Regency Village Head Solidarity Association (Pasopati) at the Pati Regency Hall, last Sunday, May 18. The meeting agreed to increase the PBB-P2 tariff to 250 percent, citing that the PB-P2 tariff in the Pati area had never been adjusted for the last 14 years.

Suddenly, the policy sparked a wave of protests by Pati residents. They considered the policy burdensome, thus holding a demonstration a few months later in mid-August 2025. After receiving various inputs, Regent Sudewo finally apologized and revoked the UN-P2 increase. This incident is not the only one that has occurred in Indonesia. The issue of the policy of increasing tax rates of up to hundreds of percent has occurred in various regions, such as Cirebon, Jombang, Semarang, to Bone, South Sulawesi.

The city of Cirebon is one of the areas hit by the issue of a massive UN increase, even up to almost 1,000 percent. This made the community carry out a wave of rejections, one of which was by the Cirebon Rainbow Association on Tuesday, August 12, 2025. The masses took to the streets to urge local governments to revoke Regional Regulation (Perda) Number 1 of 2024 which was considered burdensome for residents.

In Jombang Regency, East Java, the increase in PBB-P2 reached 800 percent. This happened to several residents. One of them is Anis Purwatiningsih, a resident of Sengon Village, Jombang, who received a bill that was originally Rp. 400 thousand to Rp. 3.5 million for two years. The Regional Revenue Agency (Bapenda) of Jombang Regency argued that the tax increase policy would occur nationally. Then, in the regions, data updates were made.

Moreover, the Jombang Regency Government said that 14 years had not been updated of the Tax Object Selling Value (NJOP) data after previously from the Tax Office only submitting data without an update. Then, the Regency Government cooperates with the village to update the data.

The increase in PBB-P2 also 'absorbed' Semarang Regency, Central Java. The increase of up to 400 percent was experienced by a number of residents. In fact, many people have complained about an increase in taxes up to 5 times from the previous figure. Head of the Regional Finance Agency (BKUD) of Semarang Regency, Rudibdo, explained that the increase was due to several factors. One of them is the location of property which is considered more strategic. According to him, the adjustment of the United Nations was made after there was a limited assessment in the land area that experienced changes in value, especially those on strategic roads.

Meanwhile in Bone Regency, South Sulawesi, protests against the increase in PBB-P2 to 300 percent on Tuesday, August 12, 2025 had to end in chaos. In front of the Bone DPRD Office dozens of students from the Islamic Student Association (HMI) were involved in clashes with the authorities. Not only because the protesters felt disappointed, their aspirations were not responded to so they tried to enter the building.

The chairman of the Bone DPRD, Andi Tenri Walinong, said that the policy was still in the discussion stage. He emphasized that the increase did not meet the legality principle of determination and was committed to overseeing its cancellation. However, Bapenda Bone denied that it had not carried out socialization, although the socialization was not yet massive. Bapenda Bone argued that the increase was due to the adjustment of the Land Value Zone (ZNT) from the State Land Agency (BPN) which had never been updated in the last 14 years.

If in various regions protests arise over the increase in the PBB-P2, the opposite situation actually occurs in DKI Jakarta. Despite the increase in 2025, DKI Jakarta Governor Pramono Anung guarantees that the increase in PBB-P2 in the capital city will not be reckless like other regions. Therefore, Pramono asked Jakarta residents not to worry about the increase in the PBB-P2. PB don't worry, Jakarta is very small, around 5 to 10 percent. In fact, I even uploaded yesterday," Pramono said at an event in Slipi, Thursday, August 14, 2025.

Perhaps, other areas can learn from the DKI Jakarta Provincial Government to minimize the burden on citizens in terms of taxes. Previously, former Governor Anies Baswedan had started the PBB-P2 eradication policy for houses with Tax Object Selling Values (NJOP) below IDR 2 billion. This policy was adapted and perfected by former Acting Governor Heru Budi Hartono with a focus on the first house.

Now, Pramono emphasized that the policy without the PBB also applies to apartments and flats with NJOP below IDR 650 million. It applies to people whose NJOP is below IDR 2 billion, the UN is 0 percent. For people who use apartments whose prices are below IDR 650 million, 0 percent too," he added.

This PDI-P politician emphasized the importance of transparency and socialization in the tax collection system. Because, this will create a fairer environment and not burden the citizens, especially for those who have limited income. According to Pramono, the right and fair policies will maintain the economic stability of citizens in the midst of the increasing dynamics of living expenses.

"With the dissemination of the PBB for certain homes and apartments, it is hoped that there will be a positive impact on the local economy and increase people's purchasing power. The DKI Provincial Government is also committed to improving public services and facilities, which have the potential to ease the burden on the community in the long term. By focusing on the welfare of the community, the government hopes to minimize dissatisfaction and increase public trust in existing policies," he explained.

Local Governments Must Prepare A Transparent And Fair Tax Policy Design

Regarding the widespread rejection of the increase in PBB-P2 in various regions, the Director of the Regional Autonomy Implementation Monitoring Committee (KPPOD), Herman N. Suparman, revealed that regional heads actually have the authority in determining the UN in accordance with Law Number 1 of 2022 concerning Financial Relations between the Central Government and the Regional Government (UU HKPD).

He gave an example, the determination of the increase in PBB-P2 to 250 percent in Pati is in accordance with Article 4 paragraph (2) to (8) Perbup Pati 17/2025. He saw that the increase in the UN was caused by an increase in property prices, and the development of land and territory utilization in Pati Regency. The increase in NJOP will be listed in detail in the Debt Tax Notification Letter (SPPT) and attached in the official documents of the Regent Regulation.

However, even though the increase in the UN is a legal policy, it will still be problematic if it is not consulted with the public in a plenary manner. But if for example what is meant by 250 percent is NJOP in a certain location, it is possible, but the record is that the 250 percent determination must be consulted to the public. The question is of course whether the policy has been consulted and disseminated to the public or not," said Herman, Sunday, August 17, 2025.

He suggested that local governments should prepare a transparent, fair and sustainable tax policy design such as a gradual transition by making multi-year adjustments to the annual increase limit accompanied by a payability test.

Second, improving NJOP appraisal by using multi-source market data, audit methodology, and NJOP correction channels that are easily accessible to residents. Third, segmentation and protection of vulnerable groups by implementing relief/incentives for first homes, retirees, veterans, and MSMEs.

Differential policy by distinguishing tariffs or reductions for productive land and speculative land to encourage asset utilization. No less important is transparency and public communication such as releasing online UN calculators, appeal guidelines, and details of changes in each sub-district or sub-district," explained Herman.

On the other hand, Deputy Chairman of the Indonesian Regional Representative Council (DPD), Tamsil Linrung encourages the issuance of municipal bonds or regional bonds as an alternative regional government financing instrument rather than relying on tax increases that are prone to refusal to reduce dependence on the state budget.

"DPD invites and facilitates local governments to issue regional bonds as self-contained development solutions and does not depend on the state budget," he said in a written statement, Sunday, August 17, 2025.

According to him, many regions in Indonesia have significant economic potential to support the issuance of regional bonds. This potential can be realized through regional asset management (underline assets) and sustainable productive business projects. He gave an example, in the energy sector, regions can use the Hydroelectric Power Plant (PLTA) to supply electricity that can be developed into an attractive business project for investors.

Tamsil revealed that the government has prepared regulations that support the issuance of municipal bonds, so that there are no fundamental obstacles from the market and legal side. The market for regional bonds is very open, and regulations are already available. This is a great opportunity for local governments to develop creative financing that involves the public," he added.

The Deputy Chairperson of the DPD for Economic and Development stated that the push for the issuance of regional bonds is in line with the spirit of regional fiscal independence emphasized by President Prabowo Subianto. Because, with regional bonds, local governments can manage strategic projects such as infrastructure, energy, or natural resource management without having to wait for the allocation of funds from the APBN.

Apart from hydropower, Tamsil continued, the tourism, agriculture, and waste management sectors can also be productive projects that attract investors. Therefore, local governments must dare to innovate, considering that through good asset management and feasible projects, regional bonds can become game changers in regional development.

He emphasized that the DPD RI will continue to facilitate local governments through socialization, training, and technical assistance to ensure that regional bond issuance runs smoothly. "We want local governments not only to see regional bonds as an alternative, but as the main strategy to accelerate sustainable development," concluded Tamsil Linrung.