State budgeting, which is the State Budget and Expenditure Budget, is a list that contains details on state revenues and expenditures within a certain time, usually one year. The National Budget consists of tax revenue, non-tax revenue, and grants,
The APBN functions for allocation, distribution and stabilization.
- The allocation function, namely in the APBN, is explained about the sources of income and their distribution. The government gets a lot of income from the people, derived from taxes. The tax will be received and then allocated to the development sector. One of the development sectors is the construction of public facilities, including bridges, roads and public parks.
- The distribution function is a tax that is received from the community and has entered into income in the APBN not necessarily always used or distributed for public purposes, but can also be used for distribution in the form of subsidies and pension funds. Government expenditure in this form is called transfer payment.
- The stability function is the APBN which functions as a guideline so that financial revenues and expenditures made by a country can be carried out regularly in accordance with established rules.
The element of state finance consists of sources of state revenue and expenditure and state expenditure, which can be described as follows.
1. Source of state revenue
it consists of taxes, non-tax revenue, loans or debt, money creation, and foreign aid. This can be explained as follows.
Taxes are mandatory contributions and must be paid by taxpayers to the state without any compensation or remuneration directly received by the taxpayer. Tax revenue can be obtained from income tax, land and building tax, import duty, excise and value added tax.
1.b. Non-tax revenue
Non-tax revenue may include natural resources, retribution, the government’s share of profits derived from SOEs, confiscated or auctioned results or fines, port service tariffs, and the results of trade activities, especially those related to export and import activities.
1.c. Loans or debt
Loans or debt can be done, among others, Bank Indonesia Certificates or SBIs, bonds, and securities.
1.d. Creation of money
The creation of money in the country of Indonesia is carried out by an Indonesian bank.
1.e. Foreign aid
Assistance obtained from abroad included, among others, UNICEF, FAO, CGI, and UNESCO.
2. State expenditure or expenditure
consists of routine spending and development spending. This can be explained as follows.
2.a. Development Expenditures
Development expenditure aims to promote development in all fields, including transportation, economy, agriculture, culture, education and health.
- Physical development, indicated by the construction of buildings, bridges, and highways.
- Non-physical development, among others shown by education, training, upgrading, and coaching employees.
2.b. Routine spending
Routine expenditure is expenditure that is done and issued regularly, both daily and monthly. Routine expenditure includes, among others, goods expenditure, travel expenditure, regional autonomy subsidy expenditure, pension expenditure, subsidy or assistance expenditure, maintenance expenditure, and employee expenditure, which among others consist of salary or wages and benefits.
State expenditure according to economic classification or type of expenditure is divided into employee expenditure, goods expenditure, capital expenditure, grants, social assistance, subsidies, and debt interest payments.