THE ASSESSED VALUE CONUNDRUM: A STUDY ON THE ACCURACY AND FAIRNESS OF PROPERTY TAXATION IN SOUTH TANGERANG CITY, INDONESIA

Abstract

The Land and Building Tax for the Rural and Urban sector (PBB-P2) is a cornerstone of fiscal decentralization in Indonesia, yet many local governments experience suboptimal revenue performance since its administrative transfer in 2014, largely due to inaccurate property value assessments. Although national regulations mandate property reassessment every three years, limited resources have hindered compliance, causing growing disparities. This study examines the accuracy and fairness of property taxation in the high-growth context of South Tangerang City using quantitative ratio analysis recommended by the International Association of Assessing Officers (IAAO). Analysis of seven districts found a severe fiscal deficit, evidenced by an average Assessment-Sales Ratio (ASR) of 42%, indicating that assessed property values remain systematically undervalued. Assessment fairness, however, revealed a nuanced conundrum: the Price-Related Differential (PRD) (0.96–1.00) suggested neutral assessment behaviour with no significant evidence of regressivity. But the Coefficient of Variation (CoV) exceeded the ideal 14% in several sub-districts, notably Cilenggang, signalling localized administrative capacity failure and significant non-uniformity in high-growth zones. The findings provide a practical, data-driven framework for local governments to overcome assessment lag. By identifying specific CoV hotspots, this study enables targeted reassessment efforts to improve valuation accuracy and strengthen regional fiscal capacity. Policy implications stress the immediate importance of systematic data updates and equity-oriented, phased tax adjustments to achieve a fairer and more sustainable local taxation system in rapidly urbanizing Indonesian regions.