Publication:
Refining Indonesia’s Intergovernmental Transfers Mechanism: Fiscal Capacity Estimation to Incentivize Subnational Tax Effort

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dc.contributor.authorChattha, Muhammad Khudadad
dc.contributor.authorBlum, Jurgen Rene
dc.contributor.authorIlman, Assyifa Szami
dc.date.accessioned2024-01-30T13:19:55Z
dc.date.available2024-01-30T13:19:55Z
dc.date.issued2024-01-25
dc.description.abstractThis paper discusses the application of the conceptual framework for potential revenue estimation using Indonesia’s existing macroeconomic indicators. The authors find that Gross Regional Domestic Product (GRDP), population, and urbanization rate are good predictors for most tax sources. These three indicators also predicted the total district’s OSRs well, providing an empirical foundation for an aggregated macro-based model to estimate all OSRs using the abovementioned variables. The rest of the paper is structured as follows: section 1 provides a description of Indonesia’s system of intergovernmental transfers and subnational taxation. It shows subnational fiscal reliance on transfers rather than OSRs. Section 2 makes the case for reforming the DAU formula and explains recent efforts by the Government of Indonesia on that front. Section 3 discusses the limited existing empirical literature on estimating potential revenues for transfers formula. Section 4 explains and applies our conceptual framework for potential revenue estimation. It also provides the empirical justification to use an aggregated approach to estimation rather than estimating each individual tax base. Section 5 applies the aggregated approach to estimating potential revenues. Section 6 discusses the equity implications and makes the case for using district fixed effects. Finally, section 7 provides a conclusion of this paper.en
dc.identifierhttp://documents.worldbank.org/curated/en/099012524034514173/P1741581e7b9550501a7cf16d8a83aff345
dc.identifier.doi10.1596/40975
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/40975
dc.languageEnglish
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesEquitable Growth, Finance and Institutions Insight - Governance
dc.rightsCC BY-NC 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by-nc/3.0/igo
dc.subjectTAX REFORM
dc.subjectFISCAL POLICY
dc.subjectINTERGOVERNMENTAL TRANSFERS
dc.subjectSUBNATIONAL TAX EFFORT
dc.subjectFISCAL CAPACITY ESTIMATION
dc.titleRefining Indonesia’s Intergovernmental Transfers Mechanismen
dc.title.subtitleFiscal Capacity Estimation to Incentivize Subnational Tax Efforten
dspace.entity.typePublication
okr.crossref.titleRefining Indonesia’s Intergovernmental Transfers Mechanism: Fiscal Capacity Estimation to Incentivize Subnational Tax Effort
okr.date.disclosure2024-01-25
okr.date.lastmodified2024-01-25T00:00:00Zen
okr.doctypeReport
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099012524034514173/P1741581e7b9550501a7cf16d8a83aff345
okr.guid099012524034514173
okr.identifier.docmidP174158-e7b95564-2bf9-4650-a7cf-6d8a83aff345
okr.identifier.doihttp://dx.doi.org/10.1596/40975
okr.identifier.externaldocumentum34245497
okr.identifier.internaldocumentum34245497
okr.identifier.report187281
okr.import.id3030
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099012524034514173/pdf/P1741581e7b9550501a7cf16d8a83aff345.pdfen
okr.region.administrativeEast Asia and Pacific
okr.region.countryIndonesia
okr.sectorCentral Government (Central Agencies),Sub-National Government
okr.themePublic Expenditure Management,Municipal Institution Building,Infrastructure Finance,Data Development and Capacity Building,Public Finance Management,Finance for Development,Finance,Domestic Revenue Administration,Public Sector Management,Data production, accessibility and use,Public Administration
okr.topicPublic Sector Expenditure Analysis and Management
okr.topicMacroeconomics and Economic Growth::Taxation & Subsidies
okr.unitEFI-EAP-GOV-FM & PS-1 (EEAG1)
okr.volume
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