Increase in Land and Building Tax (PBB) in Several Regions Is Not a Result of Central Government Policy
By: Effendy Satria
Political tension in Pati Regency has risen after the announcement of an increase in the Rural and Urban Land and Building Tax (PBB-P2) by Regent Sudewo. The policy initially raised the tax rate by up to 250 percent, sparking unrest among the community. Although the policy was eventually revoked, the anger of some residents had already grown and led to demands for the Regent’s resignation.
Amid this public scrutiny, there has been an assumption that the PBB increase was related to the central government’s budget efficiency policy. Some parties linked the reduction of regional transfer funds from the center with the local government’s decision to raise taxes. However, official statements from the palace denied any direct connection between these two issues.
The Director of Big Data Development at the Institute for Development of Economics and Finance (INDEF), Eko Listiyanto, views Pati as a region with insufficient fiscal capacity. According to him, the significant increase in PBB was a quick measure taken by the local government to cover the revenue shortfall.
Eko suspects that the PBB calculation was based on the gap in income caused by the reduction of transfer funds from the center, although he considers the increase unsustainable. He also believes that similar phenomena may occur in other regions facing budget pressures.
Despite this economic perspective, the central government, through the Head of the Presidential Communications Office, Hasan Nasbi, emphasized that accusations linking the central government’s budget efficiency with regional PBB hikes are unfounded. Hasan stated that the efficiency efforts made by the central government only amount to about 4 to 5 percent of the total regional budget. This figure, according to him, is too small to justify a tax increase of hundreds of percent at the district level.
Hasan stressed that the authority to set PBB rates lies entirely with the local government. The rate covers various tax objects such as houses, buildings, land, and non-mining or non-plantation lands. In practice, the decision to raise PBB rates should have gone through coordination between the local government and the regional parliament (DPRD), usually formalized through local regulations. He also reminded that PBB rate adjustments are not new since similar adjustments have been made in many regions in previous years.
This perspective clearly shows that regional fiscal policies are local decisions, not direct instructions from the central government. Thus, attempts to link Pati’s PBB increase with national budget efficiency policies are irrelevant.
On the political front, local dynamics reveal tensions between the local government and the community. The Secretary of LBH GP Ansor, Taufik Hidayat, pointed out the importance of local leaders being humble and open to public criticism. According to him, protests in Pati are expressions of democratic participation that should be welcomed as feedback, not threats. He reminded that the sovereignty of the people, as regulated by the constitution, is the foundation for every leader to listen to the aspirations of their citizens.
Although LBH GP Ansor’s statement is more directed at local government behavior, the underlying message aligns with the central government’s view that every fiscal decision in the region is a local policy outcome. In other words, political responsibility for the PBB increase in Pati lies with local officials, not due to pressure from central government efficiency policies.
This context is important for the public to understand, to avoid biased information that leads to misperceptions. The central government’s budget efficiency measures aim to improve state financial management and ensure more targeted spending. The relatively small efficiency percentage shows that regions still have sufficient fiscal space to set priorities without imposing excessive tax burdens on their citizens.
From a fiscal policy standpoint, the central government actually encourages regions to optimize revenue potential by boosting economic activity, rather than drastically raising tax rates. This aligns with Eko Listiyanto’s view that the long-term way to strengthen regional income is to stimulate the economic sector so that the tax base naturally expands.
The Pati case teaches that regional fiscal policies require comprehensive studies involving stakeholders and considering the economic capacity of the community. Excessive tax hikes without social readiness can trigger resistance and lower public trust in the local government.
Meanwhile, the central government’s defense of this issue demonstrates its commitment to maintaining national policy credibility while giving space for regional autonomy. This stance reinforces the principle of decentralization, which has long been the foundation of relations between central and regional governments in Indonesia. With this autonomy, regions have the freedom to manage revenues and expenditures according to local needs but are expected to implement policies that are fair and proportional to society.
Going forward, synergy between central and local governments is expected to create stable, equitable fiscal policies oriented toward sustainable economic growth. National budget efficiency should not be interpreted as an additional burden for regional communities but rather as a push to manage resources more prudently and innovatively.
