Minister of Home Affairs Promotes Digital Innovation in Regional Tax Payment Systems
Minister of Home Affairs (Mendagri), Muhammad Tito Karnavian, is pushing for digital innovation in regional tax payment systems to strengthen Local Own-Source Revenue (PAD) and achieve fiscal independence.
Tito said that this payment system will later be integrated online in a manner similar to the QRIS system operated by Bank Indonesia (BI).
“On the national level, I’ve already discussed this with the BI Governor. He has created a system like QRIS, but online. So later it can be connected with all regional governments, allowing payments to flow directly into the Regional Revenue Office,” Tito said whilst attending the Kepulauan Riau (Kepri) Ramadan Fair 2026 at the grounds of Dekranasda Building, Tanjungpinang City, Kepri, on Sunday (8 March).
In efforts to increase PAD, the Minister of Home Affairs emphasised not burdening the public with new taxes. According to him, the public as consumers have been paying tax every time they conduct transactions at hotels, restaurants, and cafés. However, these taxes are first collected by business owners acting as collectors.
“The question is: is the money deposited to the Regional Revenue Office equal to what was collected?” said Tito in an official statement.
Therefore, through an integrated digital payment system, the Minister of Home Affairs hopes that taxes paid by consumers can flow directly into regional government accounts without having to be collected by business owners first. He believes this innovation will not only prevent budget leakage but also significantly increase PAD.
The Minister of Home Affairs cited the success of Badung Regency, Bali, which achieved fiscal independence with PAD supported by the hospitality tourism sector such as hotels and restaurants. According to him, this has made Badung Regency resilient even when General Allocation Funds (DAU) from the central government were reduced.
On this occasion, the Minister of Home Affairs identified similar potential for implementation in Kepri Province, particularly in Batam, Tanjungpinang, Bintan, and Karimun. These areas are assessed to have a strong hospitality industry and significant potential to become premier national-scale MICE (Meeting, Incentive, Conference, and Exhibition) destinations, comparable to Jakarta, Bali, Yogyakarta, and Surabaya.
“If such a system can be created – whether nationally or through regional initiative – please go ahead. The key is preventing leakage and strengthening PAD so regions can achieve fiscal independence,” concluded the Minister of Home Affairs.
On the same occasion, the Minister of Home Affairs also emphasised the importance of strengthening the role of Micro, Small and Medium Enterprises (MSMEs) and expanding the market for halal products in regional economies.
According to him, strengthening these two sectors is important for maintaining economic stability whilst capitalising on the growing market opportunity, both nationally and globally.
The Minister of Home Affairs cited the success of the Yogyakarta Special Region Government (DIY) which managed to restore its economy to 5.53 per cent in 2021, after being at 0.68 per cent during the pandemic year of 2020.
He explained that the success of economic recovery in this region was supported by the MSME sector which contributed 79.6 per cent to economic growth.
“So indeed, MSMEs are our main economic backbone, the real sector,” said Tito.
Furthermore, the Minister of Home Affairs emphasised that Indonesia possesses exceptionally diverse handicraft potential and ranks among the world’s largest. This potential needs to be continuously maximised. According to him, local craft products should no longer be viewed merely as ordinary goods, but as part of the creative economy sector with high competitiveness in the global market.
On this occasion, the Minister of Home Affairs also touched on the opportunity in the halal product market. He revealed that the world’s largest halal product producers are currently dominated by non-Muslim majority countries such as China and Brazil. According to him, Indonesia must be able to compete and take on the role of producer, not merely consumer.
“So it is indeed ironic that we become a market targeted by non-Muslim majority countries, but they are the ones producing [halal products]. Why can’t we control it ourselves? That’s the idea,” he said.