Petugas menunjukan sejumlah pecahan uang rupiah emisi 2017 di unit pengelolaan uang tunai PT Bank Mandiri (Persero) Tbk, Jakarta, Selasa (30/5).
JAKARTA, KOMPAS — The central government will cut the general allocation funds by 3-4 percent in 2017 in response to tax revenue projected to be below the targeted Rp 50 trillion.
“The shortfall of state revenue will directly lead to an adjustment of the budget funds to be transferred to the regions and villages, particularly related to the general allocation fund policy, which is dynamic, or not final,” the Finance Ministry’s Director General of the Balance of Finance, Boediarso Teguh Widodo, said in Jakarta on Monday (26/6).
The general allocation funds (DAU) are funds allocated in the state budget for the equitable distribution of inter-regional financial capability. The DAU are distributed every month in installments of 1/12 of the ceiling. If the ceiling changes, an adjustment is made in the second half. This year, the DAU allocation is Rp 410.84 trillion, which consists of pure DAU of Rp 401.13 trillion and underpayment of 2016 DAU of Rp 9.71 trillion. The DAU are distributed to all provinces, regencies and cities in line with the established formula.
The final results of a budget simulation conducted by the Finance Ministry will be included in the Revised State Budget of 2017, which, according to the plan, will start to be discussed by the government and House of Representatives in July. Changes will be made, because a number of macro assumptions are no longer relevant, state revenue is below target and spending is above target. “The simulation is done while maintaining fairness in terms of proportionality and fiscal capacity of the region,” said Boediarso.
Anticipatory steps
The average DAU reduction will depend on a decree on net income. If the tax is less than Rp 50 trillion from the target as stated by Finance Minister Sri Mulyani Indrawati, the DAU decreases per region around 3-4 percent from the 2017 ceiling. Boediarso urged local governments to prepare anticipatory measures.
Executive Director of the Regional Autonomy Implementation Monitoring Committee Robert Andi Jaweng stated that many regions still depended on DAU. Only a few fiscal areas were relatively independent, such as Jakarta and Badung (Bali) regency, as local revenue reaches 60 percent.
If there is a reduction in the DAU ceiling, it is unlikely that state salaries will be reduced. Therefore, the local governments must be careful and wise in cutting their budgets. “Do not let the DAU reduction sacrifice public service programs. It provides momentum for local governments to reform their fiscal policy,” Endi said.
