Increased Regional Taxes and Awareness of Serang City People in

Paying Regional Taxes in Order to Support Development

Djasuro

, Dede Hamdani

and Fatkhul Muin

Faculty of Economics and Business, Universitas Sultan Ageng Tirtayasa, Indonesia

Faculty of Education, Universitas Sultan Ageng Tirtayasa, Indonesia

Faculty of Law, Universitas Sultan Ageng Tirtayasa, Indonesia

Keywords: Local Tax, Awareness, Regional Taxes.

Abstract: The purpose of this study is to analyze the Awareness Level of Serang City People in Paying Regional

Taxes in the City of Serang in Order to Support Urban Development. Data collection techniques are carried

out through literature studies and field studies. Regulation is the basis for tax collection and increase in local

taxes in a district/city. In tax collection, it is regulated in provisions which are rigid in their collection,

where in general the collection of local taxes is subject to existing legal provisions and is derived in the

form of regional regulations governing the technicality of regional tax collection. To be able to increase

PAD, every regional government, both regency and city, must do the right strategy so that the community

with the levies imposed does not become a burden on them, but based on awareness as citizens who are

good and obey the stipulated local government regulations. This becomes important for regional heads so

that their regions will progress faster and develop.

1 INTRODUCTION

State policy makers are interested in raising revenue

in ways that will minimize disruption to economic

activity. Economists have long understood that the

larger the behavioral response to a tax change, the

larger the resulting efﬁciency cost or deadweight

loss. Policy makers and voters are likely to be less

interested in deadweight loss, perse, but are keenly

interested in the impact of taxes on employment.

This is particularly true when the economy is in

recession or growing very slowly as it has been since

late 2007, a period when the economy and job

growth have consistently been voters’ top priorities

in national opinion polls (Thompson & Rohlin,

2012).

Regional autonomy, by not downplaying its

meaning, is basically to provide space for the people

in the regions to form small countries. In this case

the people formed their own government

organization in harmony with the conditions of the

local area. Each local government will make and

implement policies based on the will of its people.

Nevertheless, the state policy must not conflict with

state legislation, and must be in accordance with the

field of authority submitted by the central

government (Zhang, 2019).

In regional autonomy, regional tax is a

delegation from the central government to the

regional government to collect regional taxes based

on Law No. 28 of 2009 concerning Regional Taxes

and Retributions. Regional Taxes which are the

authority of the regions based on the provisions.

The City Government of Serang, in general, is

based on the provisions in where the regional

government of the city of attack can collect local

taxes in the city of Serang. General provisions

regarding the implementation of regional taxes in the

city of attack through the Regional Regulation of the

City of Serang Number 17 of 2010 concerning

Regional Taxes. In order to build awareness of tax

payments in Serang City, a strategy and tax

education is needed for the people of Serang towards

the importance of paying taxes in Serang City as an

effort to support development in Serang City.

Funding in the largest APBD comes from local

taxes collected by the government to the attacking

city community, therefore there is a need for public

awareness to pay and the government needs to build

an understanding of the community through

education on the importance of paying local taxes as

658

Djasuro, ., Hamdani, D. and Muin, F.

Increased Regional Taxes and Awareness of Serang City People in Paying Regional Taxes in Order to Support Development.

DOI: 10.5220/0009511206580660

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 658-660

ISBN: 978-989-758-432-9

an effort to attack urban development(Asatryan,

Baskaran, & Heinemann, 2017). Local tax policy

should be adequate, with a predictable amount of tax

and incentive for activities that are dominant in the

local economic structure. When formulating local

tax policy also to be borne in mind is the effect of

other factors on local economic development such as

financial support to enterprises, training and

retraining, development of local infrastructure,

incentives for innovation and development and other

(Azémar & Dharmapala, 2019).

2 THEORICAL FRAMEWORK

Government decentralization has resulted in local

governments having to be more independent and

strive to better explore potential resources as well as

those being developed in their respective regions /

this is done to obtain local revenue. Regional

original income is the backbone of regional

financing, therefore the ability to carry out the

economy is measured by the amount of contribution

given by the original opinion of the region to the

APBD.

Regional tax is one source of local revenue

(PAD) contributions. Tax area is collected by the

regional level I government and the level II regional

government and is used to finance the households of

each region. The basis of the local tax law is the law

number 28 of 2009 concerning regional taxes and

levies. Regional Original Income is revenue

obtained from the local tax sector, regional

retribution, regionally owned company results,

separated regional wealth management results, and

other legitimate local revenue (Aničić, Jelić, &

Đurović, 2016).

Regional Original Income is a component that

greatly determines the success or failure of the

independence of the Regency / City government in

the context of current regional autonomy. One

component that is very much considered in

determining the level of regional independence in

the context of regional autonomy is the Regional

Revenue sector (Alm & Leguizamon, 2018).

According to Guritno Mangkosubroto (1997)

states that generally government revenues are

needed to finance government spending. In general,

government revenue can be distinguished between

tax and non-tax revenues, for example, is

government revenues from government loans, both

domestic and foreign loans (Aničić et al., 2016).

3 RESEARCH METHODOLOGY

This study analyzes the Awareness Level of Serang

City People in Paying Regional Taxes in the City of

Serang in Order to Support Urban Development,

which uses qualitative methods through literature.

The use of this method is expected to collect a lot of

information and data thoroughly.

4 RESULT AND DISCUSSION

One of the main sources in development that can

create sustainable development is in the

management of local tax and tax resources by the

State (Azémar & Dharmapala, 2019), where in the

tax there is a need for sustainable synergy in order to

create awareness in the community about the

importance of taxes in the overall development of

the country. in Indonesia, in the management of

taxes, authority is given to the central government

and regional governments which are an integral part

of the composition of the regional autonomy unitary

state with the principle of decentralization. Regional

taxes are used for various aspects of regional

development, therefore the potential of the region in

increasing taxes needs to be carried out maximally

(Keikha, Rahgozar, & Asadpour, 2018a).

Serang City is a new autonomous region in

Banten Province and is the provincial capital of

Banten, where Serang City is one of 8 (eight)

regencies/cities in the Banten Province region which

has a position as the Banten Provincial Government

center with a population of 631,432 Soul. The male

sex is classified as the most compared to women,

although the difference is relatively small at 15,136

people (2.4%) between men and their women

This indicates that the male role is dominant in

various ways, especially in the development in

Serang city, so that the men in Serang city are

important to be included in various development

sectors, although they do not deny women to jointly

build the city of Serang .

The development of the economic sector is an

important part of the progress of each region, with

the stronger economic community (Zhang, 2019)

being a force in supporting regional revenues,

especially from PAD which has a major contribution

in the independence of a district/city in this era of

regional autonomy. The stronger the economy of the

city of Serang the greater the opportunity to pay

taxes and other contributions that can provide added

value in raising the city of Serang PAD coffers.

Increased Regional Taxes and Awareness of Serang City People in Paying Regional Taxes in Order to Support Development

659

the population growth rate in the city of Serang

is still relatively controlled with a growth rate of

below 2% per year which is 1.83. Of course, the

level of population growth must be balanced with

the level of economic growth for the regions, it is

said that the development is successful where the

economic growth must be far greater than the

population growth.

The size of the population will be a potential as

well as a burden for the government, when the

people of a region both district and city where the

unemployment rate is small, then this becomes a

positive potential for the region to develop

economically, and of course it will happen

otherwise. a burden and even disaster for the area

(Michos & Hernández-Leo, 2018).

Tax is the backbone of a country's income. Tax

revenues in Indonesia finance more than 75 percent

of the State Budget (APBN). However, since 2009

the tax revenue target has never been reached. This

is a challenge for the state tax authority, the

Directorate General of Taxes under the Ministry of

Finance to work hard to increase the growth of tax

revenues, achieve the target of tax revenues, and

ultimately achieve the independence of the state

budget.

To optimize tax revenue in the self assessment

system, voluntary compliance is required. Taxpayer

compliance is defined as compliance with reporting

requirements, which means that taxpayers pay and

report their tax obligations on time and accurate

amounts in accordance with applicable laws and

regulations (Keikha, Rahgozar, & Asadpour, 2018b).

Efforts to improve taxpayer compliance require

awareness of high taxation of taxpayers. Taxpayers

who understand the role of taxes for the state and

have a positive assessment of taxes will realize that

paying taxes is a moral obligation to society, so they

are compelled to fulfill their tax obligations.

Therefore, the higher the taxpayer's awareness, the

higher the taxpayer's compliance.

5 CONCLUSIONS

Public awareness in paying local taxes in the city of

Serang has increased and has been able to dominate

legal fees and other revenues as a component of

Regional Original Income (PAD). However, the

existence of PAD in Serang City has not yet been

able to have credibility, because the level of

independence of PAD has not reached 20% of the

total regional income. In PAD, which is associated

with total PAD, including the largest contribution is

the tax sector, Serang City from 2010-2017, only

reached Rp. 200,000,000,000, while the total PAD

from the others reaches Rp. 1400,000,000,000.

Therefore the local government of Serang City must

boost the aspect of regional taxes to increase Serang

City's PAD which has only reached 200 billion from

2010-2017.

In line with the existing APBD, the development

in Serang city is still relatively small, especially

directed towards infrastructure development in

Serang City from 2010 to 2017, however, in 2017 it

has shown a significant proportion in the hope that

the builders in Serang there will be better results

from various development sectors (poleksosbud),

because of the increase in the Serang City Budget.

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