Dio Suhenda, Jakarta – In an attempt to ease discontent over reports of steep property tax hikes in several regions, the government has scrambled to keep regional heads from making policies that place a significant financial burden on residents, especially amid the ongoing national economic slowdown.
Exorbitant tax increases have in recent weeks grabbed the public's attention after a massive protest erupted last week in Pati, Central Java, against Regent Sudewo's attempt to raise land and building taxes by up to 250 percent in the regency.
The unrest has since spread to other regions that have seen similar hikes, with protests erupting in Bone regency in South Sulawesi and calls for demonstrations emerging in Cirebon, West Java, and Jombang, East Java.
Amid the public scrutiny, Home Minister Tito Karnavian clarified that only five regional administrations had raised property taxes this year, while reported hikes elsewhere stemmed from policies enacted in previous years. He did not reveal which regions these were.
He said that, under the 2022 law on fiscal relations between the central government and regions, regional heads held the authority to raise the taxable value of property, as well as land and building tax rates, thus limiting the central government's ability to intervene in such policies.
But Tito added that he had used his authority as home minister to issue a circular calling on regional heads to proceed with caution.
"I have instructed regional heads to adjust the taxable value of property and tax rates in consideration with people's capacity and local socio-economic realities. They must also ensure proper public communication before enacting such policies," he told reporters on the sidelines of a Constitution Day event on Monday.
"As [the minister] overseeing regional administration, I stressed that if a policy is unsuitable for current conditions, it should be delayed or scrapped," Tito added.
Speculation is rife that budget shortfalls from the central government's austerity measures prompted a now-scrapped tax hike in Pati, which Presidential Communications Office head Hasan Nasbi has denied.
Previously, Deputy Coordinating Politics and Security Minister Lodewijk F. Paulus said the unrest in Pati should be "a reminder" for all regional heads not to implement policies that provoke public anger.
"There are indeed several regencies and municipalities that have adopted similar [tax hike] policies. We are monitoring them every day, [the ministry] is keeping track of it and of course we remind them [not to implement policies that will anger the public]," Lodewijk said, as quoted by Antara.
Last Monday Jombang Regent Warsubi announced a series of tax incentives for property, ranging from the elimination of penalties for late payments to reduction of building and land acquisition tax (BPHTB), after residents complained about the sharp increase in property taxes Warsubi's predecessor imposed early last year.
Warsubi said in a press release that the changes came following "recommendations from the Home Ministry and the Finance Ministry".
Jombang reported more than 12,000 tax objections were filed in 2024, and 4,100 cases this year.
More protests?
Sudewo's controversial tax hike was first revealed in June and quickly stoked opposition among Pati residents. Although he announced a rollback earlier this month, public anger persisted and culminated in last week's mass rally that left dozens injured.
Since the protest, Sudewo has largely retreated from public view, skipping the Independence Day flag-hoisting ceremony in the regency on Sunday, which was instead led by Central Java Deputy Governor Taj Yasin Maimoen.
The regent now faces possible impeachment after all eight parties in the Pati Legislative Council (DPRD) unanimously agreed to exercise their right of inquiry into his policies.
A planned demonstration for Aug. 25 demanding councilors confirm Sudewo's removal was reportedly canceled on Tuesday after the initiator of the rally talked to Sudewo by video call.
Home Minister Tito said the government would respect public expression but urged demonstrators not to resort to violence.
"The [Pati] administration needs to keep functioning, just as the Jember administration [in East Java] did when its regent faced impeachment proceedings by the provincial legislature," Tito said.
He was referring to the 2020 impeachment of Faida, Jember's first female regent, who was accused of arbitrarily dismissing and appointing officials in violation of the merit-based system. The move prompted the Administrative and Bureaucratic Reforms Ministry to withhold Jember's quota in that year's civil service recruitment drive.
A mass protest against a property tax hike on Tuesday turned violent in Bone regency, South Sulawesi, injuring four Public Order Agency (Satpol PP) personnel and two police officers.
Around 1,000 people had gathered around midday in front of the offices of Bone Regent Asman Sulaiman, waiting for him to meet them and fulfill their demand to cancel a recently implemented increase in the property tax.
Local residents were responding to a widespread rumor that the regency administration had increased the property tax by 300 percent, though the administration said the tax had been increased only by 65 percent.
Source: https://asianews.network/indonesian-government-in-crisis-control-mode-over-tax-hike