The study examined how Indonesia’s new regional tax-sharing system, known as “opsen pajak,” reshaped provincial financial reporting and contributed to a dramatic decline in recorded local revenue in Lampung during the 2025 fiscal year. The findings are important because they reveal how administrative reform, political budgeting decisions, and taxpayer behavior can collectively destabilize regional finances even when overall tax payments remain relatively stable.
According to the researchers from University of Lampung, the shortfall was not primarily caused by citizens refusing to pay taxes. Instead, the problem emerged from a mismatch between the new tax distribution mechanism and outdated provincial budgeting practices.
Tax Reform Changed How Revenue Was Recorded
Indonesia implemented a new fiscal arrangement under the Law on Financial Relations Between the Central Government and Regional Governments (HKPD). Beginning January 5, 2025, vehicle tax payments collected through regional SAMSAT offices were automatically divided between provincial and district governments through a split-payment system.
Before the reform, all motor vehicle tax revenue was first recorded by the provincial government before redistribution. Under the new mechanism, a significant portion of tax revenue goes directly into district and municipal government accounts in real time.
The study found that approximately 39.76 percent of motor vehicle tax payments are now automatically transferred to district and city governments, leaving only around 60.24 percent recorded in the provincial treasury.
The researchers explained that this administrative shift created what they described as an “administrative lag.” Provincial budget planners continued using old gross-revenue assumptions even though the new system required a net-revenue calculation model.
As a result, provincial revenue projections became unrealistic.
Provincial Revenue Fell Below Target
The financial impact on Lampung was substantial.
The province set a 2025 regional revenue target of Rp4.22 trillion, but actual revenue reached only Rp3.37 trillion, or 79.95 percent of the target. The resulting gap of Rp850 billion forced the regional government to delay payments to third parties and operational programs.
The largest declines came from two major tax sectors:
- Motor Vehicle Tax (PKB) revenue dropped by Rp358.63 billion
- Vehicle Ownership Transfer Fees (BBNKB) declined by Rp317.72 billion
Historically, both taxes have been among the largest contributors to Lampung’s regional income.
Interestingly, the study noted that aggregate vehicle tax payments from the public did not significantly decrease. In fact, total tax collections reportedly increased by around Rp50 billion overall. This indicates that the crisis stemmed more from accounting and distribution changes than from declining taxpayer compliance.
Political Budgeting Pressures Also Played a Role
The researchers from University of Lampung also identified signs of “fiscal illusion,” a condition in which governments create overly optimistic financial projections that do not reflect actual fiscal capacity.
According to the study, Lampung’s 2025 revenue targets remained close to previous years despite the known reduction in provincial tax shares caused by the opsen tax reform.
The paper argues that political incentives encouraged policymakers to maintain high revenue targets in order to preserve public confidence and support spending programs considered politically important.
The authors linked this phenomenon to Public Choice Theory, which explains how political actors may prioritize institutional or political interests when designing budgets.
“The failure to achieve revenue targets was not caused by weak taxpayer compliance, but by the provincial government’s failure to adapt its accounting and forecasting system to the new split-payment structure,” the researchers from University of Lampung explained in their analysis.
Repeated Tax Amnesty Programs Encouraged Delayed Payments
Another important finding involved taxpayer behavior.
The study found that recurring tax amnesty programs in Lampung may have unintentionally encouraged people to delay paying vehicle taxes. Because penalty waivers have been offered repeatedly, many taxpayers now expect future amnesties and strategically postpone payments.
Researchers described this as a form of moral hazard.
The study also highlighted weak law enforcement against overdue taxes on government-owned vehicles. Thousands of official vehicles reportedly remained delinquent without serious sanctions, undermining public trust in the fairness of the tax system.
This combination of repeated amnesties and inconsistent enforcement weakened both public trust and government authority, two key factors in tax compliance behavior.
Qualitative Case Study Combined Interviews and Fiscal Data
The research used a descriptive qualitative case-study approach.
The team analyzed:
- Provincial budget realization reports from 2023–2025
- Lampung regional budget documents
- Tax regulations
- Regional tax news publications
- Interviews with SAMSAT officers and regional revenue administrators
The analytical framework combined public finance theory, taxpayer behavior analysis, and fiscal governance concepts to explain how administrative reform created broader systemic problems.
Implications for Regional Governments in Indonesia
The findings have implications far beyond Lampung.
As other provinces implement similar tax-sharing reforms under Indonesia’s fiscal decentralization framework, regional governments may face comparable revenue distortions if budgeting systems are not updated.
The researchers recommended several policy responses:
- Adopt net-basis revenue forecasting models
- Reevaluate frequent tax amnesty programs
- Strengthen tax law enforcement
- Improve coordination between provincial and district governments
- Ensure government agencies themselves comply with tax obligations
The study also suggests that fiscal reform should not focus solely on technical systems. Political incentives, taxpayer psychology, and institutional credibility all influence whether tax reform succeeds.
Author Profiles
Azzahra Nia Ramadhani Sitorus is a researcher from University of Lampung specializing in regional taxation, fiscal policy, and public financial governance.
Lana Balyrna, Muhammad Yusuf Bintang, Mega Metalia, and Ratna Septiyanti are also affiliated with University of Lampung and focus on accounting, taxation administration, public finance, and regional fiscal management.
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