Fiscal Desentralization is somekind of fiscal split between local government and central government. Fiscal Desentralization is an impact from power strengthen of local goverment by establised the 22nd laws 1999 "local government". The fiscal desentralization policy also under regulated by the 25th laws 1999 ".
Principal of Fiscal Desentralization are "reduce the vertical dan horizontal fiscal imbalance", "reduce public service provision gap", "fiscal sustainability", "increase the local revenue", "efisiency of national resource", and the last "transparancy acountability of local fund alocation"
The policy of Fiscal Desentralization had been replaced by the 33rd laws 2004 and it laws regulate more complex spesially on Balance Fund policy. As we know, Balance Fund is the most important part of fiscal desentralization. Balance Fund devine on 3 alocation model : he tfirst it's call revenue sharing (tax revenue sharing and resource revenue sharing), the second is general alocation grant, and the third is spesific alocation grant.
Meanwhile, local government also have enough power for gaining the local revenue by taking some local tax and local cuotation. So, today the local government is being powerfull in fiscal background and have abillity for create their own local development.
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