Building Better Governance through Synergy and Collaboration in Tax and Levy Management in West Nusa Tenggara

In September 2024, the Provincial Revenue Management Agency (Bappenda) of West Nusa Tenggara (NTB) and SKALA hosted a two-day workshop in Mataram to finalize a cooperation agreement between provincial and district/city governments on regional taxes and levies. This workshop focused on implementing Regional Regulation No. 2/2024, derived from Indonesia’s Law No. 1/2022 on Financial Relations between Central and Regional Governments (HKPD), which governs the management of regional taxes (Pajak Daerah dan Retribusi Daerah or PDRD).

This event was a significant step toward enhancing local revenue management and improving public services in NTB. The workshop brought together key stakeholders from central, provincial, and district levels, including officials from the Ministry of Finance, the Ministry of Home Affairs, the Head of NTB’s Bappenda, and other related government work units.

Cooperation Agreement for Effective PDRD Implementation in NTB

The main goal of the workshop was to finalize a Cooperation Agreement (Perjanjian Kerja Sama or PKS) between the Head of the Provincial Bappenda and the Heads of the Regency/City Bappenda throughout NTB to implement Regional Regulation No.2/2022 on PDRD. In particular, the PKS covers the surtax of Motor Vehicle Tax (PKB), Motor Vehicle Transfer Fee (BBNKB), and Non-Metallic Mineral and Rock Tax (MBLB). The PKS is designed to increase synergy and collaboration between provincial and district/city governments in collecting taxes and levies according to their respective authorities and in accordance with applicable regulations.

This workshop also aimed to align the provincial and district/city government work plans for the 2025 budget year, with a focus on increasing the capacity of local government officials responsible for implementing regional tax and levy regulations. At the end of the workshop, the PKS was signed by NTB’s provincial government.

A Collaborative Framework for Tax Collection

Since early 2024, the SKALA program has actively contributed to discussions on drafting Regional Head Regulations (Perkada) concerning regional taxes and levies. Following the ratification of the Perkada, SKALA has continued its support by strengthening synergy through the PKS.

Another key objective was to improve how local governments collect taxes. There were two main reasons for this: First, taxes and fees collected locally are an important source of funds that helps governments provide essential services to their citizens. Second, the HKPD Law requires provincial and district/city governments to work together to implement tax collection mechanisms.

During the workshop, NTB government officials, with support from SKALA, developed a framework to improve coordination between provincial and district/city governments in collecting taxes. This framework focused on key revenue streams, including vehicle taxes, transfer fees for vehicle ownership, and taxes on non-metallic minerals and rocks. By bringing together efforts across government levels, the framework aims to eliminate inefficiencies and optimize tax revenues for 2025.

The Road Ahead

The outcomes of the workshop have laid the groundwork for more effective governance in NTB. The Cooperation Agreement serves as a guideline to implement PDRD, assigning responsibility to each local government for its own tax collection while ensuring a coordinated approach that promotes consistency and cooperation throughout the province.

Moving forward, local governments will closely monitor the implementation of the PKS to ensure commitments are upheld. They will also pay attention to the use of additional funds from surtax for capacity building and evaluate the success of tax collection efforts in increasing local revenues.

The collaboration between SKALA and NTB’s provincial and district/city governments sets a strong example of how synergy and collaboration can lead to better governance and improved public services, paving the way for a more prosperous future for NTB.