JAKARTA: Thousands of Indonesians have taken to the streets this month to vent against higher taxes, and local leaders warn public outrage will only worsen if President Prabowo Subianto’s new proposal to slash regional funding comes to pass.
Prabowo last week proposed to parliament that regional funding be cut by a quarter to 650 trillion rupiah (US$40 billion) in 2026 – part of his efforts to re-centralise government finances and fund signature ambitious policy programmes like his promise of free school lunches nationwide.
The government argues the programmes will bring economic growth and prosperity over the long term, but critics counter his priorities are too costly and endanger democracy by taking away autonomy from regional areas.
Local leaders say the proposed cuts, which would result in the smallest regional budget in a decade, will just lead to more jumps in local taxes.
They add that they have had no choice but to hike taxes due to the previous administration’s efforts to rein in local control over natural resources, and a 6 per cent cut to 2025 regional funding compared to initial budget plans.
Already in some towns, anger has hit a boiling point.
In Pati in Central Java last week, police fired tear gas and used water cannon to disperse thousands of protesters who hurled rocks into a government office and set ablaze a police car amid an outcry over a 250 per cent land tax hike.
Another town in the Sulawesi islands, Bone, also saw hundreds demonstrate against a planned 65 per cent increase in local land and property taxes.
“This is a matter of fairness. The source of people’s unrest is economic issues, when distribution is unfair and economic development is not inclusive, is uneven and does not trickle down,” said Bursah Zarnubi, chairman of Indonesia’s association of district leaders.
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