Local Retribution Original Local Government Revenues PAD

29 of the people with industrialization and peace and tranquility of working towards a just and prosperous society. 4 Regional company engaged in the field according to household affairs under the Laws governing local government subjects. 5 Branches of production which are important for the region and to lord lives of many people in the area, the capital is entirely separated regional assets. d. Other Legal Revenues Other types of PAD Revenue are constituted under Act No. 33 of 2004. Other legal revenues are revenues gained from outside taxes, retribution, and income, which have been described above. Other legal revenues include: 1 The sale of regional assets that are not separated by cash or installment mortgage, current account. 2 Interest income. 3 Receipt of compensation claims area. 4 Receipt of commissions. 5 Discounts or other forms achieved as a result of sales or procurement of goods and services by a region. 6 Revenue gains from the differences in the exchange rate against foreign currencies. 30

4. General Allocation Funds DAU

According to the Law No.33 2004, the General Allocation Funds are sourced from the State Revenues and Expenditure Budget APBN to be allocated for local government in balancing the financial capacities among regions and to fulfill local government needs in terms of decentralization. The source of regional revenues in the context of autonomy and decentralization are dominated by aid and transfer from the central government in form of the General Allocation Funds DAU, Special Allocation Funds DAK, and Tax shares DBH, whereas the amount of PAD is still relatively small Mardiasmo, 2002. Referring to Law 104, 2000 that the prime DAU objective is horizontal equity and sufficiency. The objective of horizontal equity is in the central government’s interest in order to distribute the income in a fair and equitable way to avoid wide disparities among regions. Meanwhile, the regional interest adequacy sufficiency is to close the fiscal gap. The sufficiency is influenced by several factors, namely Authority, Capacity, and Minimum Service Standards MSS Mardiasmo, 2002. According to Halim 2009, economic disparities among the provinces cannot be avoided by fiscal decentralization due to the lack of tax sources and fewer natural resources, which can be explored by the Regional Government. In order to tackle inequality, the Central