The Impact of Regional Splitting and Local Taxes on Local Government Spending in Indonesia

Abstract

This study aims to analyze the variables of regional splitting status, local taxes, GRDP, and population as determinants of local government spending in six regions in Indonesia. The analytical method used was panel data regression, with data obtained from the 2006-2017 research period. The results showed that the split local government spending is significantly greater than un-split local government in five regions. Furthermore, population and GRDP have a significant and positive effect on local government spending in all regions. Meanwhile, local taxes have a positive effect on local government spending only in four regions. Therefore, the government is expected to evaluate the implementation of regional splitting, create regulations, a conducive business climate, and maintain the population growth rate in all regions to properly maintain the increase in local government spending.

Keywords

• Local Government Spending
• Regional Splitting
• Tax Revenue
• Population

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