Across Indonesia, the sharpest surges in land and building taxes have clustered in a few headline-making regions, with Pati in Central Java becoming the emblem of public backlash after residents were hit with increases of up to 250 per cent; under mounting pressure, the regent rescinded the policy on 8 August 2025 and rolled rates back to their 2024 levels. In East Java, Jombang has seen some of the most extreme jumps since 2024, with local officials acknowledging that a subset of bills spiked by triple- and quadruple-digits—reporting cases as high as 1,202 per cent and individual examples rising roughly twelvefold, which in turn triggered thousands of formal objections in 2025. A similar pattern of shock bills has been reported in West Java’s Cirebon, where certain homeowners described increases around 1,000 per cent compared with the previous year. Broader round-ups have also flagged steep hikes—often in the hundreds of per cent—in places such as Semarang (Central Java) and Bone (South Sulawesi), underscoring how abruptly reassessed property values and local fiscal gaps can translate into sudden tax burdens. GoodStats By contrast, Jakarta has explicitly capped year-over-year payable increases at 50 per cent of one’s prior bill for 2025, illustrating how policy design can cushion reassessment shocks even when nominal liabilities rise.Taken together, these cases show that drastic rises are not uniform nationwide but are concentrated where reassessment cycles were long delayed, valuation jumps were aggressive, or fiscal pressures were acute; where political pushback is strongest—as in Pati—local leaders have already reversed course, while elsewhere residents are pursuing relief through objections and instalments.Why Did This Happen?
Essentially, regions across Indonesia witnessed dramatic spikes in land and building taxes due to a confluence of systemic reforms and local fiscal pressures. One of the key drivers was the implementation of Law No. 1 of 2022 on the Financial Relations between the Central Government and Regional Governments, which came into effect in 2024. This legislation encouraged local authorities to actively update the NJOP (the assessed property value), a practice that many had neglected for years. As a result, tax bills soared where valuation updates had been long overdue.Accompanying this were structural financial imbalances under the existing intergovernmental fiscal framework (HKPD). In resource-rich areas like Pati, local governments often found themselves in the frustrating position of "living in a rice barn but still needing to buy rice." In other words, they produced significant wealth, yet lacked sufficient fiscal autonomy and revenue to meet local needs—prompting a reliance on instruments like PBB-P2 to shore up regional finances.Moreover, some local administrations argued that deferred updates to property valuations over many years resulted in a sudden, catching-up surge in tax obligations. The case of Pati stands out: the first sizable tax adjustment in 14 years came all at once—an increase of up to 250 per cent. Similarly, Cirebon, Jombang, Semarang and others experienced valuation catch-ups that produced sky-high figures, sometimes up to 1000 per cent.Finally, many policies were rolled out without sufficient public consultation or transparency, making them feel arbitrary and oppressive to citizens. In Pati, for instance, the lack of engagement triggered protests so vehement that local political leadership was compelled to retreat from its policy.To sum up: The reasons behind the surges in PBB-P2 across various regions were layered—legal reform, fiscal shortfalls, long-delayed reassessments, and poor communication all colluding to push taxes from simmering to boiling.Here’s how different regions responded to the dramatic spikes in land and building taxes (PBB-P2). In Pati, the proposal to raise the PBB-P2 by 250 per cent triggered mass unrest. Beginning on 10 August 2025, up to 100,000 residents mobilised under the “United Pati Society Alliance,” demanding not only the cancellation of the tax increase, but also the resignation of the regent and a host of other policy reversals, including rejecting a five-day school week and halting costly public projects. The protest was the largest in the regency’s history and, having escalated to clashes with police and military forces, it compelled the local council (DPRD Pati) to revoke the tax increase and initiate an inquiry into the regent’s conduct.In contrast, Jombang residents chose a more institutional route. When some property owners faced staggering surges—one individual's tax jumped from IDR 96,979 to over IDR 1.1 million (an increase of over 1,200 per cent)—they submitted formal appeals to the regional revenue office (Bapenda). These appeals were largely successful: for example, one property’s tax was reduced from over IDR 2.3 million to approximately IDR 640,000. Authorities attributed the increase to outdated or inaccurate property valuations (NJOP) derived from a 2022 appraisal, and conducted recalibrations in cooperation with village administrations to avoid repeating such distortions in 2026.In Cirebon, widespread shock and protests followed announcements of tax increases reaching around 1,000 per cent. Responding to public pressure, the local council (DPRD) and the mayor agreed to revise the applicable regulation (Perda), reducing the maximum rate from 0.5 per cent to 0.3 per cent—or potentially even 0.25 per cent—and placed the revision on the legislative calendar. Meanwhile, the regency government introduced incentive programmes: tax discounts for early payments, ranging from 5 per cent to 20 per cent, and the elimination of administrative penalties on back taxes dating back to 2009.Evaluating the appropriateness of the recent sharp increases in land and building taxes (PBB-P2) depends on how well the balancing act was handled between the urgent need for revenue and the economic resilience of the populace.From a logical standpoint, updating property valuations and modernising regional revenue streams are indeed necessary moves, especially under the 2022 financial law (UU HKPD). These reforms aim to improve fiscal autonomy and accountability. However, the blunt execution—rocketing tax burdens in a single leap—can hardly be described as prudent.Short-term effects of such sudden increases are predominantly negative. Households confront diminished disposable income, often cutting back on essential consumption, which amplifies stress on middle-income groups. Local businesses may suffer as operational costs rise, while the broader credit and financial sector may experience suppressed demand due to weakened liquidity.In the medium term, these strains can intensify. Consumers wary of sustained financial pressure may curtail spending persistently, thereby cooling domestic consumption. Concurrently, businesses may defer or abandon investment plans, perceiving the fiscal climate as uncertain and unfriendly to expansion.Looking towards the long term, judiciously deploying additional tax revenue—such as funding infrastructure, public services, or quality-of-life improvements—could foster productive returns and help buoy economic growth. Nonetheless, without such judicious reinvestment, the adverse side of continued tax cuts outweighs the potential benefits, breeding reduced investment, weaker GDP growth, and diminished public trust.Moreover, public sentiment appears to overwhelmingly judge the policy as inequitable—particularly in areas like Pati, where official surveys indicate that 98 per cent of respondents believe the increases disregard social fairness and exceed economic capability.While the tax reform under legal and fiscal goals may be well-intentioned, the abrupt and disproportionately heavy implementation undermines legitimacy and risks both short- and long-term harm unless explicitly balanced with transparency, fairness measures, and clear reinvestment.Strategically, the implementation of a sharp rise in the Land and Building Tax (PBB) demands more than just administrative readiness; it requires a comprehensive roadmap that takes into account the socio-economic temperature of the country. In the short term, a shock increase without cushioning measures risks triggering public discontent, accelerating property sell-offs, and widening the trust gap between citizens and the state. Medium-term consequences may include reduced investment in real estate, slowed land development projects, and potential shifts in urban demographics as lower- to middle-income residents move to avoid higher tax zones. Long-term, if unmitigated, the policy could reshape land ownership patterns in favour of high-capital investors, erode the sense of place for local communities, and normalise a regressive tax burden that outpaces income growth.From a public communication perspective, the government cannot rely on one-way press releases or formulaic social media posts to justify such a sensitive measure. The narrative needs to be built around clarity, fairness, and tangible benefits, while demonstrating that the state is equally committed to tightening its own fiscal belt. Without this, the increased risks are framed by the public as a mere revenue grab to cover budget shortfalls. The messaging should also actively dispel misinformation, explain the calculation mechanisms in relatable terms, and offer accessible channels for appeal or phased payment plans. Failure to communicate in a human-centric way could turn a fiscal adjustment into a symbol of tone-deaf governance.
Taxation can be likened to a kitchen knife: in the right hands, it can prepare a nourishing meal for everyone; in the wrong hands, it can become a tool of harm. On the side of benefit, taxation serves as the lifeblood of a nation’s budget, funding public goods such as roads, schools, hospitals, and subsidies that sustain a functioning society. When properly structured, it also acts as a means of redistributing wealth, with the wealthy contributing more to support social programmes for the less fortunate, thus narrowing the economic gap. Furthermore, taxation can be a powerful instrument to guide public behaviour, discouraging harmful activities like excessive smoking through higher levies, or encouraging positive initiatives like environmentally friendly businesses via tax incentives. Above all, a robust tax system provides financial independence, reducing a country’s reliance on foreign debt or external aid.However, taxation also carries potential harm when poorly managed. Corruption and misappropriation can transform it into a source of enrichment for a few rather than a benefit for the many. Excessive or ill-timed tax burdens can slow economic growth, weaken purchasing power, and even force businesses to shut down. If designed without care, taxation can distort markets, leading to inflated prices or fuelling illicit activities such as smuggling to avoid import duties. Perhaps most damaging of all is when tax systems fail to uphold fairness: those with limited means may end up bearing the brunt of compliance, while wealthy elites exploit loopholes, offshore accounts, and weak enforcement to evade their responsibilities.In essence, taxation is a double-edged instrument. Properly wielded, it is a vital engine for national progress and social equity; mishandled, it becomes little more than a sophisticated form of public extortion and a channel for economic leakage.From a philosophical and political perspective, taxation represents the organised means by which a state secures resources from its citizens to sustain the structures of governance, maintain public order, and realise collective goals. It is often framed as both a moral obligation and a social contract: the citizen contributes financially, and in return, the state safeguards their rights, provides essential services, and fosters the common good. Political theory frequently debates the ethical limits of taxation, questioning how far the state’s authority should extend over the private wealth of individuals.From an economic perspective, taxation functions as a primary tool for generating public revenue, redistributing wealth, and regulating market behaviour. It shapes incentives, influences consumption and investment decisions, and acts as a balancing mechanism to address economic inequality. Economists examine taxation not only in terms of efficiency and productivity but also concerning its capacity to stimulate or hinder economic growth.From a social perspective, taxation is a reflection of collective solidarity, embodying the principle that all members of a society contribute to the resources that sustain it. It also becomes a marker of fairness or injustice depending on how the tax burden is distributed across different social strata. The public’s perception of fairness can greatly influence their willingness to comply.From a cultural perspective, attitudes towards taxation are deeply shaped by historical experiences, societal norms, and narratives about the role of the state. In some cultures, paying taxes is seen as an honourable civic duty; in others, it is met with suspicion, often due to legacies of corruption or misuse of public funds. These cultural underpinnings influence not just compliance but also the public discourse around fiscal policy.From a philosophical and political standpoint, taxation represents the social contract in its most tangible form, embodying the idea that citizens contribute a portion of their wealth to sustain the shared institutions that enable collective life. It reflects the belief that governance is not merely about authority but about mutual responsibility—citizens uphold the state through their contributions, and in return, the state safeguards the rights, freedoms, and welfare of its people. In this view, taxes are less a financial obligation and more a moral covenant between the governed and their governors, sustained by trust and the equitable use of resources.From an economic perspective, taxation serves as a fundamental instrument for resource allocation, wealth redistribution, and economic stability. It allows governments to fund public goods and services that markets alone cannot provide efficiently, such as infrastructure, education, and healthcare. Tax policies can stimulate growth, curb inflation, or address inequality, depending on how they are designed and implemented. In essence, it is the invisible lever by which economic currents are guided towards a more balanced and sustainable trajectory.From a social and cultural lens, taxation shapes the collective ethos of a society, influencing perceptions of fairness, solidarity, and civic duty. The way a community accepts, resists, or negotiates tax obligations reveals deep-seated values and trust—or mistrust—towards authority. In some cultures, paying taxes is seen as a badge of civic pride, an affirmation of belonging to a functioning collective, while in others, it is approached with cynicism, as a reluctant surrender to a system perceived as corrupt or inefficient. Thus, taxation becomes not just an economic mechanism but a mirror reflecting the moral fibre of a society.From a philosophical and political perspective, taxation represents not merely a financial obligation, but a social contract between the governed and the governing. It is a manifestation of the implicit agreement that citizens contribute a portion of their wealth in return for the maintenance of public order, the provision of essential services, and the preservation of the state itself. Politically, it is both an instrument of governance and a reflection of the moral priorities of those in power, revealing what a society values and what it is prepared to sacrifice for the common good.From an economic standpoint, taxation serves as both a mechanism for funding the state and a tool for influencing economic behaviour. It can redistribute wealth, stimulate or restrain consumption, and correct market imbalances. While its efficiency is often debated, its necessity in sustaining the infrastructure of modern economies is beyond dispute.From a social and cultural angle, taxation embodies the collective responsibility of a community to care for its members. It is rooted in traditions of mutual support, charity, and civic duty, but its acceptance or resistance often depends on how fairly the system is perceived to be applied. In some cultures, paying taxes is seen as a civic virtue; in others, it is viewed with suspicion, as an imposition from a distant authority.Although the words “tax” and “zakah” may share a similar arrangement of vowels, they belong to entirely different worlds in both meaning and purpose. A tax is a compulsory financial charge imposed by a government on its citizens to fund public services, infrastructure, and administration. It is secular by nature, determined by legal codes, and its rates and uses change according to political priorities. Zakah, on the other hand, is a divinely mandated act of worship in Islam, calculated as a fixed percentage of one’s wealth to be distributed among specific categories of people in need. Unlike tax, zakah is a spiritual obligation tied to one’s faith, purifying both wealth and soul, and its rules remain constant as laid down in the Qur’an and Sunnah. Thus, while both involve giving a portion of wealth, one serves the machinery of the state and the other serves the command of Allah.
In the course of human history, taxation emerged as a mechanism for states to finance their administrative and military apparatus, often rooted in the authority of rulers who claimed the right to levy charges upon their subjects. In ancient civilisations such as Egypt, Mesopotamia, and Imperial Rome, taxes were collected in the form of grain, livestock, or precious metals, and their imposition was less a matter of moral obligation than of political necessity. The structure of taxation evolved over centuries, becoming codified in legal systems, but it has largely remained an instrument of statecraft—enforced by power, sustained by bureaucracy, and justified by the perceived needs of governance.Zakah, by contrast, originates from the earliest days of Islamic civilisation as a divinely mandated duty, codified in the Qur’an and practised under the direct guidance of the Prophet Muhammad ﷺ. Unlike taxes, zakah was not designed as a tool of state power in its inception, but as a means of purifying wealth and fostering social solidarity. In the early Islamic community of Madinah, zakah collection was both a spiritual and communal process, overseen by appointed agents yet framed in moral terms that linked the giver, the recipient, and God in a shared ethical relationship. Over time, Muslim polities institutionalised zakah, yet its theological foundation as an act of worship distinguished it from the purely fiscal mechanisms of worldly taxation.Thus, while tax and zakah may both involve the transfer of wealth from individuals to a governing authority, their historical paths reveal fundamentally different origins—one forged in the pragmatism of earthly governance, the other in the sacred covenant between faith and society.Many scholars firmly reject the idea of equating taxation with zakat, arguing that the two are fundamentally different in origin, purpose, and religious status. Zakat is an act of worship that is divinely prescribed, bound by precise rules in the Qur’an and Sunnah, and directed towards specific categories of recipients. Its fulfilment is considered a spiritual obligation that purifies wealth and fosters a sense of solidarity among Muslims. Taxation, on the other hand, is a man-made financial obligation determined by governments to fund public services, which can change in rate and allocation according to political and economic needs. To conflate the two, according to these scholars, risks diluting the sanctity of zakat and may mislead Muslims into thinking that paying taxes absolves them of their religious duty. For this reason, classical and contemporary jurists alike emphasise that while both may serve social and economic functions, zakat remains a separate and non-substitutable pillar of Islam. In short, zakat belongs to the realm of ‘ibadah, while tax belongs to the realm of governance.
