The Issue of Regional Revenue: Is Fiscal Decentralization the Solution?

Abstract

Fiscal decentralization is a policy strategy that aims to give regional governments greater authority in financial management, in order to increase efficiency, accountability and relevance of policies to the needs of local communities which is expected to be able to bridge prosperity in order to reduce the level of inequality between regions. This research uses a descriptive qualitative method with a literature study approach, namely data obtained from online observations from journals, websites and book sources. This article examines the benefits, challenges and impacts of fiscal decentralization on regional development. This policy provides an opportunity to increase autonomy and public services, regional readiness is a determining factor for success. In general, the results of the literature review show that fiscal decentralization is not necessarily an automatic solution to regional revenue problems; Its success depends greatly on the fiscal capacity, institutional readiness and quality of governance of each region. Therefore, a strategy to strengthen fiscal capacity and regional accountability is needed to ensure that fiscal decentralization can be a real solution, not an additional burden for regions.