Abstract
This study discusses the development of fiscal capacity in Central Java, Indonesia. The purpose of this study is to analyze internal and external factors that increase regional fiscal capacity, and formulate strategies by analyzing internal and external elements to obtain four alternative strategies namely 'strength - opportunity' strategy, 'strength - threat' strategy, 'weakness - opportunity' strategy and Strategy for 'weaknesses - threats'. This study uses secondary data to analyze indicators of regional fiscal capacity and primary data collected through focused discussions, to analyze strategies. The results of the analysis indicate that there are several main strategies to increase regional fiscal in Central Java Province, namely the program of intensification and extensification of regional taxes; improving the quality of human resources with special competencies in the field of taxation; synergy and internal coordination between regional government institutions; improvement of the supervision system for taxpayers; realizing clear and legal regional regulations, simplifying the mechanism for managing investment licenses in Central Java and optimizing regional revenues through modernizing the collection of taxes and levies by utilizing technology. Modernization of increasing regional fiscal capacity will encourage the achievement of equitable regional revenue, increase public participation, administrative efficiency, consistent law enforcement, and improve the level of public confidence in the implementation of good governance.
Highlights
This study discusses the development of fiscal capacity in Central Java, Indonesia
The results of the analysis indicate that there are several main strategies to increase regional fiscal in Central Java Province, namely the program of intensification and extensification of regional taxes; improving the quality of human resources with special competencies in the field of taxation; synergy and internal coordination between regional government institutions; improvement of the supervision system for taxpayers; realizing clear and legal regional regulations, simplifying the mechanism for managing investment licenses in Central Java and optimizing regional revenues through modernizing the collection of taxes and levies by utilizing technology
Indonesia political decision in the implementation of regional autonomy which began on January 1st, 2001 has a broad and serious implication
Summary
This study discusses the development of fiscal capacity in Central Java, Indonesia. The purpose of this study is to analyze internal and external factors that increase regional fiscal capacity, and formulate strategies by analyzing internal and external elements to obtain four alternative strategies namely 'strength - opportunity' strategy, 'strength - threat' strategy, 'weakness - opportunity' strategy and Strategy for 'weaknesses - threats'. It is seen as a policy that represents the affordability on many community activities in broader range, covers several political groups, religion, ethnics, and tribes in the process of making development decisions (Rondinelli, 1990) This representation is believed can lead to greater equity in the allocation of resources and government funding. Fiscal decentralization is one of central government policies whose principles and objectives is to reduce fiscal imbalance between central and regional government (vertical fiscal imbalance) and between regions (horizontal fiscal imbalance), improve the quality of public service in region, and reduce the imbalance of public service between region; improve the efficiency of the utilization of national resource, management, transparency, and accountability in the implementation of transfer allocation into region precisely, on time, efficiently, and fairly, and support fiscal sustainability in macro economy policies. Fiscal capacity is a component that is included to the formula of General Allocation Fund (DAU) calculation in which its allocation is based on a formula of fiscal ratio of fiscal independence of Central Java gap concept
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