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Denpasar, Bali in an Acute Cash Crunch

Denpasar, Bali Running Out of Tax Revenues Due Island Shutdown

NusaBali reports that tax revenues (PAD) for Bali’s Capital City of Denpasar have taken a giant economic hit during March-June 2020 as the result of the COVID-19 pandemic.

As a result, the Municipality of Denpasar is predicting a current deficit of Rp. 250 billion as tax revenues are only 5% what was collected every month before the pandemic. 

The Acting Secretary for the City of Denpasar, I Gusti Ngurah Eddy Mulia, on Thursday, 02 July 2020, lamented that tourism as the primary source of tax revenue had all but evaporated. In any case, current tax proceeds wholly inadequate to contribute to the operating cost of the Municipality, let alone the massive cost of managing the COVID-19 pandemic. 

Eddy Mulia said in addition to tourism, Denpasar also earns income from building and land taxes (PBB). But due to mass unemployment in the tourism sector, many Denpasar residents were facing problems in meeting their tax obligations.

Continuing, Eddy said: “There is also income derived from taxes from building permits (IMB), but at this time, no one is building anything. At most, we are only collecting IMB taxes at a level of 5% of the normal amount. There is little we can do. Meanwhile, the budget for mitigating CODIV-19 in Denpasar requires funding.”

Eddy said the target for tax revenues each year is Rp. 900 billion. Broken down monthly, Denpasar needs Rp. 75 million each month in tax revenues. However, in the past four months (March-June), tax revenues have decreased dramatically. Fortunately, the costs incurred in handling COVID-19 is also being funded by the Central Government, at least for now. 

In desperation, Eddy said, “if it continues like this, we won’t know what to do.”

Eddy related that if the pandemic effect on Bali’s Economy continues until December 2020, there is a possibility that the payroll budget for municipal workers will be affected. This could result in pay cuts for people employed by the City of Denpasar. “If there is no other alternative, whether we like it or not, the budget for salaries will be affected. At this point, more than Rp. 100 billion has been used,” Eddy Mulia.

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