Since the fall of the New Order era, the problem of dividing tasks and dividing economic and financial resources between the central government and regional governments has moved towards regional autonomy. Previously, the pendulum moving towards regional autonomy moved centrally, in other words, autonomy for regions was granted by the central government in a very limited manner.
These shifts are related to the political position of central and regional governments which has become a trend in developing countries, especially from the 1980s until now.
Generally, the disputes that ultimately become a tug-of-war between the center and the regions originate from three main things: (1) Regional authority and duties (expenditure assignment); (2) Regional authority to collect taxes (tax assignment) and (3) Intergovernmental fiscal transfer system. There are several things that deserve attention, in connection with the regulation of regional government and its relationship with finance, including: (a ) understanding of several types of income sources originating from original regional income and income originating from the center; (b) aspirations formed from the reactions of the central and regional governments in the formation of laws that are appropriate for regional autonomy such as Law no. 22 and 25 of 1999; (c) regulation of regional taxes and regional levies through Law no. 34 of 2000; (d) the emergence of several new levies in the autonomy era; (e) several alternative sources of regional revenue.
By considering the matters stated above, it is hoped that regional financial structures can be improved in line with the realization of appropriate regional autonomy.
Jakarta, August 25, 2003
Robert A. Simanjuntak
