Low Effectiveness of Tax Management

Oct 13, 2025 by talynt.org 49 views

Introduction

The realization of regional capital expenditures is a crucial aspect of regional development in Indonesia, particularly in the Nanggroe Aceh Darussalam Province (NAD). The province has been experiencing rapid economic growth, and the government has been investing heavily in infrastructure development to support the growth. However, the effectiveness of the use of funds for capital expenditures has been a concern. This study aims to examine the effect of balance funds, the remaining budget calculation (SILPA), and regional tax on the realization of capital expenditure in the Regency/City in NAD during the 2016-2020 period.

Literature Review

The literature review reveals that balance funds, SILPA, and regional tax are critical factors in the realization of capital expenditures. Balance funds are the main source of income for the region, and their effective management is essential for supporting regional development programs. SILPA, on the other hand, is a mechanism used by local governments to utilize the remaining budget of the previous year effectively to fund development projects in the following year. Regional tax, however, has been a concern, as its effectiveness in supporting regional development programs has been limited.

Methodology

This study uses the associative method of causality, which tests the relationship between independent variables (balance funds, SILPA, and regional taxes) with dependent variables (realization of capital expenditure). The data used is secondary data obtained from the official website of the Ministry of Finance (www.djpk.kemenkeu.go.id). The research sample consisted of 23 districts/cities in NAD during the 2016-2020 period, with a total of 115 data.

Results

The results of the study show that simultaneously, the balance fund, SILPA, and local taxes had a positive and significant influence on the realization of capital expenditure in the district/city in NAD. However, partially, only the Balancing and Silpa funding is proven to have a positive and significant influence on the realization of capital expenditure. Local taxes, on the other hand, showed no significant effect.

Deeper Analysis

Balance Fund

The results of the study show that the balance fund plays an important role in encouraging the realization of capital expenditure in Aceh. This makes sense because the balance fund is the main source of income for the region, especially for regions that have limited fiscal capabilities. Balancing funds can be used to finance infrastructure development, such as roads, bridges, and school buildings, which in turn can improve the welfare of the community and encourage regional economic growth.

SILPA

SILPA also proved to have a positive and significant effect on the realization of capital expenditure in Aceh. This shows that local governments in Aceh are able to utilize the remaining budget of the previous year effectively to fund development projects in the following year. The use of the right SILPA can help the region to complete the delayed development project and improve the quality of development in the regions.

Local Tax

The results of the study showed that local taxes had no significant effect on the realization of capital expenditure in Aceh. This can be caused by several factors, such as:

Low Effectiveness of Tax Management: Possibly, the tax management system in the region is not optimal so that the potential for tax revenue has not been maximally explored.
Limited Resources: Regions may have limited resources to increase the effectiveness of tax levies, such as skilled workers and adequate infrastructure.
Low Taxpayer Compliance: Low levels of taxpayer compliance can also be an inhibiting factor.

Recommendation

Increasing the Efficiency of Balancing Fund Management

Local governments in Aceh need to increase the efficiency and effectiveness of the management of balance funds to ensure that the funds are used optimally in supporting regional development programs.

Increasing the Use of SILPA

Local governments in Aceh need to strengthen the SILPA management mechanism to ensure that the funds are used effectively and efficiently to support regional development programs in the following year.

Increasing the Effectiveness of Regional Tax Management

Local Governments in Aceh need to increase the effectiveness of regional tax management through various efforts such as:

Improvement of the Tax Administration System: The tax administration system in the region needs to be improved to increase the effectiveness of tax levies.
Increased Awareness of Taxpayers: Taxpayers need to be aware of their tax obligations to increase compliance.
Increasing Skilled Human Resources in the Field of Taxation: The region needs to have skilled human resources in the field of taxation to increase the effectiveness of tax management.
Application of Information Technology to Simplify the Taxation Process: The use of information technology can simplify the taxation process and increase compliance.

By paying attention to these factors, it is hoped that the results of this study can be taken into consideration for local governments in Aceh to increase the effectiveness of the use of balance funds, SILPA, and local taxes in supporting regional development programs and improving the welfare of the people in Aceh.

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effect of balance funds, the remaining budget calculation (SILPA), and regional tax on the realization of capital expenditure in the Regency/City in Nanggroe Aceh Darussalam Province (NAD) during the 2016-2020 period.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the factors that influence the realization of capital expenditure in the Regency/City in NAD. The findings of this study can be used by local governments in Aceh to improve the effectiveness of the use of balance funds, SILPA, and local taxes in supporting regional development programs.

Q: What are the independent variables in this study?

A: The independent variables in this study are balance funds, SILPA, and regional tax.

Q: What are the dependent variables in this study?

A: The dependent variable in this study is the realization of capital expenditure.

Q: What is the methodology used in this study?

A: This study uses the associative method of causality, which tests the relationship between independent variables (balance funds, SILPA, and regional taxes) with dependent variables (realization of capital expenditure). The data used is secondary data obtained from the official website of the Ministry of Finance (www.djpk.kemenkeu.go.id).

Q: What are the results of this study?

A: The results of this study show that simultaneously, the balance fund, SILPA, and local taxes had a positive and significant influence on the realization of capital expenditure in the district/city in NAD. However, partially, only the Balancing and Silpa funding is proven to have a positive and significant influence on the realization of capital expenditure. Local taxes, on the other hand, showed no significant effect.

Q: What are the implications of this study?

A: The implications of this study are that local governments in Aceh need to increase the efficiency and effectiveness of the management of balance funds, strengthen the SILPA management mechanism, and improve the effectiveness of regional tax management to support regional development programs.

Q: What are the limitations of this study?

A: The limitations of this study are that it only examines the effect of balance funds, SILPA, and regional tax on the realization of capital expenditure in the Regency/City in NAD during the 2016-2020 period. The study does not examine other factors that may influence the realization of capital expenditure.

Q: What are the recommendations of this study?

A: The recommendations of this study are that local governments in Aceh need to:

Increase the efficiency and effectiveness of the management of balance funds
Strengthen the SILPA management mechanism
Improve the effectiveness of regional tax management through various efforts such as improvement of the tax administration system, increased awareness of taxpayers, increasing skilled human resources in the field of taxation, and application of information technology to simplify the taxation process.

Q: What are the future research directions?

A: The future research directions are to examine the effect of other factors on the realization of capital expenditure in the Regency/City in NAD, such as the role of local government leadership, the impact of external factors on regional development, and the effectiveness of regional development programs.

Q: What are the policy implications of this study?

A: The policy implications of this study are that local governments in Aceh need to prioritize the effective management of balance funds, SILPA, and regional tax to support regional development programs. The study also highlights the need for local governments to improve the effectiveness of regional tax management to increase revenue and support regional development programs.