POLICY STRATEGIES FOR INCREASING LOCALLY-GENERATED REVENUE (PAD) IN THE ERA OF REGIONAL AUTONOMY

Abstract

The implementation of regional autonomy in Indonesia has provided local governments with greater authority and responsibility to manage their respective governmental affairs, particularly in the financial sector. One of the primary objectives of regional autonomy is to strengthen fiscal independence through the optimization of Locally-Generated Revenue (Pendapatan Asli Daerah/PAD). However, many local governments continue to face challenges in maximizing their revenue potential due to limited fiscal capacity, inadequate tax administration, low taxpayer compliance, and dependence on financial transfers from the central government. This study aims to analyze policy strategies for increasing Locally-Generated Revenue in the era of regional autonomy by examining the legal and regulatory framework, optimization of local revenue sources, and evaluation of PAD enhancement policies in supporting fiscal independence and sustainable regional development. This research employs a normative juridical method using statutory, conceptual, and analytical approaches. The data are obtained through a literature review of relevant legislation, legal documents, academic journals, and other secondary legal materials related to regional financial management and fiscal decentralization. The findings indicate that strengthening the legal and regulatory framework is essential to ensuring legal certainty, accountability, transparency, and effectiveness in regional revenue management. Furthermore, optimizing local revenue sources requires innovative strategies, including the expansion of local tax bases, improvement of tax and retribution administration, digital transformation of revenue collection systems, enhancement of regional asset management, and professional development of Regional-Owned Enterprises. These measures should be implemented without creating excessive financial burdens on local communities or discouraging regional investment. In addition, evaluating PAD enhancement policies through fiscal independence ratios, revenue effectiveness, revenue growth, and the contribution of PAD to total regional income is necessary to measure the success of fiscal decentralization. The study concludes that increasing Locally-Generated Revenue requires an integrated policy approach combining regulatory strengthening, administrative innovation, effective fiscal governance, and sustainable economic development. Therefore, local governments must develop transparent, accountable, and locally responsive revenue policies to reduce fiscal dependency, improve public services, promote regional economic competitiveness, and achieve equitable and sustainable development under regional autonomy.