Adjusting the Tax Base for Local Land and Building Tax Based on Justice and Mashlahah ‘Ammah

Abstract

Taxes constitute one of the sources of local revenue that play an important role in supporting the administration of regency and municipal governments. One type of local tax is the Rural and Urban Land and Building Tax (PBB-P2), the tax base of which is determined by the Taxable Object Sale Value (NJOP) of land and buildings. Adjustments to the NJOP are necessary to ensure that taxable property values remain consistent with prevailing market price developments. However, the failure of local governments to conduct periodic adjustments may create disparities between the NJOP and market values, thereby affecting the fairness of tax burden distribution. This study aims to examine the legal framework governing the authority to adjust the NJOP for PBB-P2 and evaluate it in light of the principle of maṣlaḥah from the perspective of Islamic economic law. This study employs a normative juridical method using statutory and conceptual approaches. The analytical framework is based on the concept of maṣlaḥah and the Islamic principle of justice (al-‘adl). The findings indicate that the existing statutory framework governing NJOP adjustments does not provide sufficient clarity or adequate implementation standards, potentially resulting in variations in policy across local jurisdictions. Such conditions may lead to inequities in the distribution of tax burdens and fail to fully reflect maṣlaḥah ‘āmmah (the public interest). This study underscores the importance of strengthening the regulatory framework for NJOP adjustments to ensure transparency, proportionality, and a commitment to the public interest, while maintaining a balance between optimizing local revenue and protecting taxpayers’ economic well-being.