Jakarta – The central government has clarified that it is not involved in regional tax hike decisions, including the recent controversy over the Urban and Rural Land and Building Tax (PBB-P2) in Pati Regency, Central Java.
This statement comes in response to public speculation that tax increases in various regions are a result of insufficient funding from the central government.
Minister of Home Affairs Muhammad Tito Karnavian urged regional leaders to ensure that tax and levy policies remain pro-people.
“I urge all regional heads: when implementing policies related to taxes and levies, do not burden the public. Do it gradually,” he said.
Tito emphasized the need for caution in determining the taxable sale value of property (NJOP) to avoid creating additional hardship for the public. He also recommended allowing sufficient time for public socialization of new policies.
“For example, a regulation could be issued this year, but only take effect on January 1st of the following year,” he explained. He further advised local governments to draft tax policies based on community dynamics and open dialogue.
Responding to recent mass protests in Pati—where demonstrators demanded the resignation of Regent Sudewo following a reported 250% hike in PBB-P2—Tito reminded citizens to voice their concerns through appropriate mechanisms.
“If there are demands, follow the proper procedures. Don’t break the law,” he stressed. The Pati government has since revoked the tax increase, reverting PBB-P2 rates to 2024 levels.
Presidential Communications Chief Hasan Nasbi also confirmed that the PBB-P2 policy in Pati falls entirely under local government authority.
“In the case of Pati, we hope this can be resolved peacefully. All parties should come to the table with a cool head,” he said in Jakarta.
Hasan firmly denied that the regional tax increase was related to the central government’s budget efficiency program.
He explained that the 2025 efficiency measures apply across all municipalities, ministries, and government agencies, making it inappropriate to link the situation in Pati to a broader national policy. He also noted that PBB-P2 tariffs are set by local governments in coordination with regional parliaments (DPRD), with some local bylaws enacted as early as 2023 or 2024.
According to Hasan, the central government’s budget efficiency adjustments only affect around 4–5 percent of total regional funding, making it a minor influence on local tax decisions.
State Secretary Prasetyo Hadi echoed this message, emphasizing that land tax increases are municipal-level decisions.
“It is not true to suggest that these tax hikes are caused by central government processes. That’s simply not the case,” he stated.
Prasetyo also reminded local leaders to carefully assess the social impact of their policies.
“To be a leader is to constantly exercise caution. Do your best not to burden the people,” he concluded.
