The implications of fiscal decentralization and budget governance on economic capacity and community welfare

Abstract

Purpose The purpose of this study is to investigate the relationship between government and Balinese society in tax decentralization through budgeting seem to insignificantly improve the welfare of Balinese society. Design methodology/approach This research was conducted in Bali Province involving eight regencies and one city. The data used in this study were secondary data, derived from relevant institutions or from websites through internet browsing and other documentations in the form of official reports/publications, such as regional budget, accountability reports, regional regulations and documents on budget and development of the regional economy. The present research used the partial least squares analysis technique. Findings Fiscal decentralization does not necessarily lead to better budget management. The success of fiscal decentralization can be found in the quality of the regional budget and the quality of budget management. The allocation of the regional budget for public service improvement and the development of infrastructure will increase the economic capacity of the regions. Improvement in regional economic capacity encourages the improvement of community welfare. Originality/value This income inequality points to the issue of fiscal capacity. The development of the financial role of district/city regions in the Province of Bali remains at a level gap with the development level of community welfare. During this period, the financial role of the government as estimated from the ratio of the national budget to the regional budget is higher than that of the society development. The acceleration role of the government is not proportional to the development of Human Development Index outcomes.

The Effect of Financial Performance and Balanced Funds on Capital Expenditure of Local Government in District/City in Indonesia

“…Fiscal decentralization proposes that the local government harness financial resources (self-owned or loans) to conduct social welfare development. The minimum requirement for fiscal decentralization is an adequate authority from the local government to mobilising revenue, and a sound accountability to managing expenditure (Purbadharmaja, Maryunani, Ananda, and Santoso, 2018). Although the local government holds the authority, the central government provides aids and supervision.…”

“…Although the local government holds the authority, the central government provides aids and supervision. This definition shows a functional relationship between central and local governments in financial matter (Purbadharmaja et al 2018). Faguet (2004) and Purbadharmaja et al, (2018) stated that decentralization is crucial for an efficient and effective public service, as well as improving accountability, autonomy, sensibility and public satisfaction (Cho, 2018).…”

Does Fiscal Decentralization and Green Innovation mitigate the environmental pollution with the help of Institutional governance? Evidence from Asian Countries using novel (MMQR)

“…There are many ways to control environmental pollution, but Fiscal Decentralization (FD) is the driving force to improve the environmental quality Tanzi, (1996). FD is an efficient allocation of resources and distribution of spending powers from central governments to the lower-division government (regional, provincial, and municipal) to improve the public service delivery Purbadharmaja et al, (2019). Local government is closer to the people, therefore they can easily identify the needs and preferences of the residents and responds to them rapidly.…”

The reduction of human development gap in origin and new regency in Eastern Indonesia

“…Properly-managed budget allocation provides opportunity and assurance to improve production in the private sector. Private sector is expected for providing contribution to local government in terms of the expansion of job opportunities that will become one of the sources of PAD (Putu, Maryunani, Fajri, & Budi, 2019). Therefore, the increase of PAD can be followed with the adjustment of regional expenditures, designated for the improvement of human resource development in the field of education, health and per capita income, to meet the equal human development in the entire region.…”