Effect Of Regional Original Revenue, General Allocation Funds And Tax Revenue Sharing Funds On Capital Expenditures With Economic Growth As Moderating Variables In Regency/City Government In North Sumatra Province 2012-2014 Period

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Effect of Regional Original Revenue, General Allocation Funds and Tax Revenue Sharing Funds on Capital Expenditures with Economic Growth as Moderating Variables in Regency/City Government in North Sumatra Province 2012-2014 Period

Introduction

Increasing infrastructure development and public facilities is the main goal of capital expenditure in the region. To achieve this goal, local governments rely on various sources of funding, including Regional Original Revenue (PAD), General Allocation Funds (DAU), and Tax Revenue Sharing Funds (DBH). This study examined the influence of the three funding sources on capital expenditure in district/city government in North Sumatra for the 2012-2014 period, as well as how the influence of economic growth as a moderating variable in this relationship.

Background

The role of local governments in North Sumatra in managing regional development is crucial. The government's ability to allocate funds effectively and efficiently is essential in achieving the goals of regional development. The three funding sources, PAD, DAU, and DBH, are the primary sources of funding for local governments in North Sumatra. However, the effectiveness of these funding sources in supporting capital expenditure is still a topic of debate.

Methodology

This study uses secondary data from 28 regencies/cities in North Sumatra selected by purposive sampling. The data collected includes information on PAD, DAU, DBH, capital expenditure, and economic growth. The analysis was conducted using multiple regression analysis to examine the relationship between the three funding sources and capital expenditure, as well as the moderating effect of economic growth.

Results

The results of the analysis showed that simultaneously, PAD, DAU, and DBH Tax had a significant effect on capital expenditure.

Partial Effect

  • PAD: The results showed that PAD has a positive and significant effect on capital expenditure. This indicates that the higher the PAD, the higher the capital expenditure that can be done by the local government.
  • DAU: The results also showed that DAU has a positive and significant effect on capital expenditure. This indicates that DAU is an important source of funding to support capital expenditure in the regions.
  • DBH Tax: Although DBH Tax has a positive effect on capital expenditure, the effect is not significant. This indicates that DBH Tax has a role, but the effect is not strong enough to encourage significant increase in capital expenditure.

The Role of Economic Growth

This study also tested the effect of economic growth as a moderating variable in the relationship between PAD, DAU, DBH Tax, and Capital Expenditures. The results show that economic growth has no significant influence in moderating the relationship.

Implications

The results of this study have several important implications:

  • Local governments in North Sumatra need to continue to increase PAD through various creative and innovative efforts to support capital expenditure and encourage regional development.
  • Increased efficiency and effectiveness in the use of DAU and optimal use of tax DBH is the key to maximizing its benefits to increase capital expenditure.
  • Although economic growth is not proven to moderate the relationship between funding sources and capital expenditure, increasing economic growth remains a priority to encourage improving the quality of life of the community and strengthen the basis of the regional economy.

Conclusion

This study confirms the importance of PAD, DAU, and DBH Taxes in supporting capital expenditure in district/city governments in North Sumatra. Efforts to improve and optimize these three funding sources need to be carried out to encourage better infrastructure development and public facilities, as well as improving the welfare of the people in the regions.

Recommendations

Based on the findings of this study, the following recommendations are made:

  • Local governments in North Sumatra should prioritize increasing PAD through various creative and innovative efforts to support capital expenditure and encourage regional development.
  • Increased efficiency and effectiveness in the use of DAU and optimal use of tax DBH is the key to maximizing its benefits to increase capital expenditure.
  • The government should prioritize increasing economic growth to encourage improving the quality of life of the community and strengthen the basis of the regional economy.

Limitations

This study has several limitations that should be noted:

  • The study only examined the relationship between PAD, DAU, DBH, and capital expenditure in district/city governments in North Sumatra for the 2012-2014 period.
  • The study did not examine the relationship between other funding sources and capital expenditure.
  • The study did not examine the moderating effect of other variables on the relationship between PAD, DAU, DBH, and capital expenditure.

Future Research Directions

Based on the findings of this study, the following future research directions are suggested:

  • Examine the relationship between other funding sources and capital expenditure in district/city governments in North Sumatra.
  • Examine the moderating effect of other variables on the relationship between PAD, DAU, DBH, and capital expenditure.
  • Examine the relationship between PAD, DAU, DBH, and capital expenditure in other regions in Indonesia.

Conclusion

In conclusion, this study confirms the importance of PAD, DAU, and DBH Taxes in supporting capital expenditure in district/city governments in North Sumatra. Efforts to improve and optimize these three funding sources need to be carried out to encourage better infrastructure development and public facilities, as well as improving the welfare of the people in the regions.
Frequently Asked Questions (FAQs) about the Effect of Regional Original Revenue, General Allocation Funds and Tax Revenue Sharing Funds on Capital Expenditures with Economic Growth as Moderating Variables in Regency/City Government in North Sumatra Province 2012-2014 Period

Q: What is the main goal of capital expenditure in the region?

A: The main goal of capital expenditure in the region is to increase infrastructure development and public facilities.

Q: What are the three funding sources used by local governments in North Sumatra?

A: The three funding sources used by local governments in North Sumatra are Regional Original Revenue (PAD), General Allocation Funds (DAU), and Tax Revenue Sharing Funds (DBH).

Q: What is the role of PAD in supporting capital expenditure?

A: PAD has a positive and significant effect on capital expenditure, indicating that the higher the PAD, the higher the capital expenditure that can be done by the local government.

Q: What is the role of DAU in supporting capital expenditure?

A: DAU has a positive and significant effect on capital expenditure, indicating that DAU is an important source of funding to support capital expenditure in the regions.

Q: What is the role of DBH Tax in supporting capital expenditure?

A: DBH Tax has a positive effect on capital expenditure, but the effect is not significant, indicating that DBH Tax has a role, but the effect is not strong enough to encourage significant increase in capital expenditure.

Q: What is the moderating effect of economic growth on the relationship between PAD, DAU, DBH, and capital expenditure?

A: Economic growth has no significant influence in moderating the relationship between PAD, DAU, DBH, and capital expenditure.

Q: What are the implications of the study's findings?

A: The study's findings have several important implications, including the need for local governments in North Sumatra to continue to increase PAD through various creative and innovative efforts to support capital expenditure and encourage regional development.

Q: What are the recommendations of the study?

A: The study recommends that local governments in North Sumatra should prioritize increasing PAD through various creative and innovative efforts to support capital expenditure and encourage regional development, and that increased efficiency and effectiveness in the use of DAU and optimal use of tax DBH is the key to maximizing its benefits to increase capital expenditure.

Q: What are the limitations of the study?

A: The study has several limitations, including the fact that it only examined the relationship between PAD, DAU, DBH, and capital expenditure in district/city governments in North Sumatra for the 2012-2014 period, and that it did not examine the relationship between other funding sources and capital expenditure.

Q: What are the future research directions suggested by the study?

A: The study suggests that future research should examine the relationship between other funding sources and capital expenditure in district/city governments in North Sumatra, and that it should examine the moderating effect of other variables on the relationship between PAD, DAU, DBH, and capital expenditure.

Q: What is the conclusion of the study?

A: The study concludes that PAD, DAU, and DBH Taxes are important sources of funding for capital expenditure in district/city governments in North Sumatra, and that efforts to improve and optimize these three funding sources need to be carried out to encourage better infrastructure development and public facilities, as well as improving the welfare of the people in the regions.