Improving Local Own-Source Revenue Through Hotel and Restaurant Taxes: An Islamic Economics' Perspective on Public Finance

Abstract

- This study aims to find out the contribution of the hotel and restaurant taxes to the improvement of Local Own-Source Revenue (PAD) of Langsa City, to find out the government’s effort to maximize the tax contribution and to examine whether the government’s way in maximizing the tax contribution is in line with the theory of public finance in Islam. It is a qualitative study with primary data obtained by interviewing several key informants. Content analysis techniques were carried out on primary and secondary data. The study found that the contribution of hotel and restaurant taxes to PAD for 7 years, namely 2016-2022, are still very lacking due to the achievement percentage which is below 3%. Among the obstacles in tax collection is the lack of public awareness of the obligation to pay taxes because there is no transparency regarding financial management. The Langsa City government’s way of maximizing the contribution of hotel and restaurant taxes is by continuous promotion using billboard, setting fines or sanctions, and enforcing control. Tax payments are made over the counter through the BPKD office and pick-up management. The government’s efforts in maximizing the contribution of hotel and restaurant taxes are in accordance with the Islamic economics theory on public finance because it is not burdensome to the community and the collected taxes are directed to fulfil the needs of society. Moreover, the government is also in the process of promoting transparency in tax collection through the QRIS payment system. Finally, this study recommends to all of stakeholder to maximize functions and supervision in order to optimize PAD of Langsa City.