The mechanism aims to improve the financial independence of districts and cities.
Jakarta (ANTARA) - The Central and Regional Governments Financial Relations (HKPD) Bill will increase revenue from Regional Taxes and Retributions (PDRD) by Rp30.1 trillion to Rp91.3 trillion from Rp61.2 trillion, Finance Minister Sri Mulyani Indrawati has forecast.

"Along with regional governments' commitment to improving tax administration quality, the new PDRD policy package in the bill will be able to increase regional financial capacity and fiscal space," she said at a plenary meeting of the Indonesian House of Representatives here on Tuesday.

The bill will change local tax regulations, including the ones on tariffs, which would be able to increase Regional Original Revenues (PAD), she explained.

In addition, the HKPD Bill will simplify the categories of regional taxes and retributions to reduce the administrative costs of tax collection, without decreasing the amount of PDRD received, she added.

Related news: Tax revenues utilized to support education, health workers: Indrawati

The bill will also introduce mechanisms on additional taxes for Automotive Vehicle Tax (PKB) and Automotive Vehicle Transfer Fee (BBNKB) of 66 percent, without increasing the burden on taxpayers, the minister informed.

"The mechanism aims to improve the financial independence of districts and cities," she remarked.

In addition, the mechanism could answer the aspirations of a number of parties who have expressed the wish that district and city governments would collect special taxes for two-wheeled vehicles, Indrawati said.

The bill will also provide options to regional governments to collect additional retributions to support regional fiscal capacity for providing quality services to the community to protect public interests and environmental sustainability, such as implementing retributions for controlling oil palm plantations, she added.

HKPD Bill comprises 12 chapters and 193 articles. In addition to PDRD, it covers the issues of regional fund transfers, regional spending management, regional debt financing, endowment fund establishment, and national fiscal policy synergy.

At the plenary meeting, members of the Indonesian House of Representatives agreed to ratify the bill into law. (
Related news: State revenue up 0.6% on-year in Q1: deputy minister

Translator: Agatha Victoria, Uyu Liman
Editor: Suharto
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