Indonesia's Regional Budget Cuts Set to Spur More Local Tax Hikes, Public Outrage

Critics Say President's Spending Priorities Are Too Costly and Endanger Democracy

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JAKARTA — Thousands of Indonesians have taken to the streets in August to vent against higher taxes, and local leaders warn that public outrage will only worsen if President Prabowo Subianto's new proposal to slash regional funding comes to pass.

Mr. Prabowo last week proposed to Parliament that regional funding be cut by a quarter to 650 trillion rupiah (S$51 billion) in 2026 — part of his efforts to re-centralize government finances and fund signature ambitious policy programs like his promise of free school lunches nationwide.

The planned cuts are sure to inflame the debate over Mr. Prabowo's spending priorities. The government argues that the programs will bring economic growth and prosperity over the long term, but critics counter that his priorities are too costly and endanger democracy by taking away autonomy from regional areas.

Local leaders say the proposed cuts, which would result in the smallest regional budget in a decade, will just lead to more jumps in local taxes.

They add that they have had no choice but to hike taxes due to the previous administration's efforts to rein in local control over natural resources, and a 6 percent cut to 2025 regional funding compared with initial budget plans.

Already in some towns, anger has hit a boiling point.