The Contribution of the Manufacturing Industry Sector to Local Taxes Revenue: Evidence in the Bakorwil Purwakarta Area, Indonesia Dede Jajang Suyaman1*, Gusganda Suria Manda1, Mochamad Faizal Rizki2
1Faculty of Economics, Universitas Singaperbangsa Karawang, Karawang, Indonesia
2Faculty of Social and Political Science, Universitas Singaperbangsa Karawang, Karawang, Indonesia
Abstract
The manufacturing sector has the potential for a vast regional tax base and broad impacts on the regional economy. It is because the sector operates various supply chain management activities. The study purposed to analyze the contribution of the manufacturing industry growth to local tax revenues in the Bakorwil Purwakarta area, Indonesia. The analysis method used the econometric method based on panel data analysis, involving data from 5 regencies and municipality from 2001 to 2021. The results showed that the manufacturing sector^s growth contribution did not significantly affect local tax revenue. It is assumed that most of the sector^s tax contributions are a type of tax collected by the central government. Local governments had yet to fully maximize local taxes^ potential, particularly the manufacturing sector^s potential tax base. For this reason, local governments should carry out tax reforms on an ongoing basis, among others, through improving tax administration, increasing human resource capacity, and preparing tax evaluation studies.
Keywords: Manufacturing Sector, Multiplier Effect, Local Taxes, Panel Data Analysis
