(Indonesia, 25th) The usually quiet and little-known town of Pati in Central Java Province, Indonesia, has recently become the focus of national attention. On August 13, thousands of people took to the streets to protest against Mayor Sudewo’s decision to raise land and building taxes by 250%. Before Sudewo stepped forward to address the crowd, the demonstration escalated into a violent clash between police and civilians, during which police vehicles were reportedly set on fire. Even after Sudewo appeared, the crowd threw bottled water at him.
The sudden tax hike can be traced back to the central government's fiscal transfers to local governments. Due to insufficient fiscal transfers, local governments are forced to seek other channels of revenue, with land and property taxation—falling within their jurisdiction—becoming the first target.
The central government’s fiscal space has become stretched, as President Prabowo’s administration spends heavily on various large-scale social policies. Nationwide free school meal programs for children, the establishment of rural cooperatives, and people’s schools are just a few of the costly projects that require major allocations from the national treasury. In his August 15 budget statement, Prabowo proposed to slash the central government’s fiscal transfers to local governments from this year’s 919 trillion rupiah (approximately 238.06 billion ringgit) by almost 30%, down to 650 trillion rupiah next year.
The sudden tax hike can be traced back to the central government's fiscal transfers to local governments. Due to insufficient fiscal transfers, local governments are forced to seek other channels of revenue, with land and property taxation—falling within their jurisdiction—becoming the first target.
The central government’s fiscal space has become stretched, as President Prabowo’s administration spends heavily on various large-scale social policies. Nationwide free school meal programs for children, the establishment of rural cooperatives, and people’s schools are just a few of the costly projects that require major allocations from the national treasury. In his August 15 budget statement, Prabowo proposed to slash the central government’s fiscal transfers to local governments from this year’s 919 trillion rupiah (approximately 238.06 billion ringgit) by almost 30%, down to 650 trillion rupiah next year.