IMPLEMENTING PROPERTY TAX REFORM IN DEVELOPING COUNTRIES: Lessons from the Property Tax in Indonesia1

Roy Kelly

Review of Urban & Regional Development Studies, 1992, vol. 4, issue 2, 193-208

Abstract: Indonesia is currently undergoing a major property tax reform. The reform has been undertaken in two steps. First, a new Land and Building Tax was enacted in 1986. This new law dramatically simplified the property tax structure and replaced seven different land†related taxes. Second, the Government initiated a major institutional exercise to strengthen property tax administration. This resulted in a major reorganization of the tax department, the adoption of a “collection†led†implementation strategy, and the introduction of an innovative payment point collection system (SISTEP). Since the enactment of these legal and institutional reforms, property tax revenues have increased dramatically from Rp.154 billion in 1985/86 to over Rp.900 billion in 1991/92. Collection efficiency has improved and enforcement activities have resulted in a historic property seizure for property tax delinquency in October 1991. This paper analyzes the results of the Indonesian property tax reform and identifies lessons for developing countries interested in strategically implementing property tax reform.

Date: 1992
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