Retribution: Definition, Types, Rates, and Complete Examples

According to Wikipedia, retribution originates from the English term “user fee,” which refers to a mandatory charge paid by users of a facility to its owner or manager as compensation for the use of that facility.

Generally, people pay retribution fees for public facilities provided by the central or local government. For instance, in the United States, tourists are required to pay retribution to access the top of the Statue of Liberty, use services at the Library of Congress, or enter national parks.

Although similar, retribution and tax differ significantly. One key difference is that retribution can be paid in return for direct services received at that moment.

Definition of Retribution

Retribution is regulated under Law No. 28 of 2009 concerning Regional Taxes and Regional Retribution. It defines regional retribution as a charge levied by the local government as payment for licenses or services specifically provided and offered by the local government for the benefit of individuals or legal entities.

Expert Definitions of Retribution:

Ahmad Yani

Retribution allows provincial, regency, or city governments to explore financial sources by setting retribution types tailored to the aspirations of the local community, beyond those already established.

Mahmudi

Retribution is a charge imposed by local governments on those who benefit from specific services provided by the government.

Marihot P. Siahaan

Regional retribution is a fee charged for specific services or licenses provided by local governments for the benefit of individuals or entities.

Characteristics of Retribution

According to Josef Riwu Kaho, the characteristics of retribution are:

• Collected by the government or the state.
• Levied through economic compulsion.
• Directly corresponds to a specific service or benefit.
• Mandatory for anyone using or benefiting from government-provided services.

Systems of Retribution Collection

There are two main systems:

Government-assessed system: The government determines the amount of retribution payable.
Self-assessed system: The taxpayer calculates the retribution owed and pays it to the government.

Types of Retribution

1. General Services Retribution

This involves services provided by the local government for public interest and benefit. These services can be used by individuals or groups. In cases where revenue potential is too small or services are intentionally offered for free, retribution may not be charged.

2. Business Services Retribution

This type involves services offered by local governments that could also be provided by the private sector. These are commercially driven services managed by the government.

Functions of Regional Retribution

Retribution plays a crucial role in generating Original Local Revenue (Pendapatan Asli Daerah or PAD). A high retribution collection target means a greater contribution to PAD. The functions include:

1. Source of Local Income

Local governments can reduce dependency on the central government when they can fund their needs independently. The central government usually supports regional development, such as education, social aid, and civil servant wages.

2. Supporting Economic Activities

When regional revenue is sufficient, governments can finance various economic activities as planned.

3. Economic Stability

Retribution helps stabilize the local economy, as it funds all local government operations.

4. Equitable Development

Retribution contributes to fair regional development and improves local livelihoods by boosting incomes and quality of life.

Examples of Retribution

Retribution is common in everyday life. It’s charged for public facilities such as terminals, recreation areas, markets, and other public spaces used collectively by society.

Additional Terms Related to Retribution

Retribution Obligors: Individuals or groups required by law to pay retribution, including those responsible for withholding or collecting retribution on others’ behalf.

Retribution Period: A predetermined time frame during which retribution must be paid for utilizing services or permits provided by local governments.

Thus, individuals or groups benefiting from specific services are obligated to pay retribution to their local governments.

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