Reducing Regional Fiscal Inequality And Increasing Regional Independence (Case Study Of The Regency, City And The Province Of Gorontalo)

Abstract

Improving the economic fundamentals and fiscal independence of the city districts and Gorontalo Province is urgent for more than two decades. The issue of poverty levels and quality economic growth is in line with the issue of regional fiscal independence ratios and fiscal inequality. This paper aims to analyze the level of regional fiscal independence in Gorontalo Province, using a descriptive qualitative approach assisted by the Williamson and Theil index. The research concluded, First The level of fiscal independence in the five regencies, a city and Gorontalo Province is still very low. This can be seen from the high vertical fiscal inequality index and the very low regional fiscal independence ratio. Specifically for Gorontalo Province and Gorontalo City, the narrower margin between regional original income or PAD and central transfers means positive decentralization increases capacity and fiscal independence. The five regencies still rely on PAD from the Other Legal PAD component, whereas the performance of regional taxes and levies is still very low. Second, PAD owned by Gorontalo Province and Gorontalo City is contributed more by regional taxes. Third, the regional spending structure which is dominated by employee spending and indirect spending has not had an automatic impact in increasing the creation of new jobs and community and regional income. Fourth, the synergy of central and regional government fiscal/spending policies is not yet optimal. Transformation of the economic structure through strengthening the industrial ecosystem, transformation of agricultural commodities, and transformation of the governance of potential regional taxation and levies in regional policy synergy to increase fiscal independence.