Budgeting a Revenue Never Received: First-Year Estimates of a Surcharge Across 508 Jurisdictions
Keywords:
budget forecasting, fiscal decentralisation, surcharge taxation, estimation under uncertainty, local government financeAbstract
Budget forecasting normally proceeds from a prior year. This article examines what governments do when there is none. Indonesia's Law No. 1 of 2022 gave every regency and city a surcharge on provincial vehicle taxation from 5 January 2025, and the budgets adopted for that year contain the first estimates any of them had ever made of it. Using the national budget file for all 508 district-level jurisdictions, the article finds that the estimates are extraordinarily dispersed. Budgeted surcharge revenue amounts to IDR 31.71 trillion, or 24.30 per cent of all budgeted district tax revenue, but the share ranges from zero to 88.60 per cent with a coefficient of variation of 0.538. Fifty-four jurisdictions, one in ten, budgeted nothing at all for an entitlement conferred on them by statute. Dispersion is itself unevenly distributed: within Aceh the coefficient of variation is 0.761 and within Central Java 0.286, so provinces differ not only in how much their districts expect but in how much they agree. The article argues that a first-year estimate of a new instrument measures the estimating capacity of the government making it rather than the revenue it will receive, and that treating such estimates as forecasts of yield misreads what they are.References
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