Across continents, governments are wrestling with the delicate balance between raising revenue and maintaining public trust, as Indonesia and the United Kingdom each face mounting unrest over tax hikes and fiscal reforms. In both Jakarta and London, the summer of 2025 has brought record-breaking tax collections, but also a surge in public anger and warnings from local leaders, economists, and opposition politicians who fear that the next steps could push their countries into deeper turmoil.
In Indonesia, the streets have become a stage for thousands of angry citizens protesting against a wave of tax increases and looming government funding cuts. According to Reuters, President Prabowo Subianto’s recent proposal to parliament would slash regional funding by a quarter in 2026, reducing the allocation to 650 trillion rupiah ($40 billion)—the smallest regional budget in a decade. The move, designed to re-centralize government finances and bankroll ambitious initiatives like free school lunches for all children, has drawn sharp criticism from local leaders who warn that the cuts will force them to hike taxes even further.
Already, the consequences are visible. In Pati, Central Java, police resorted to tear gas and water cannons to disperse thousands of protestors furious over a 250% land tax increase. The unrest escalated to rock-throwing and a police car set ablaze. Meanwhile, in Bone, Sulawesi, hundreds took to the streets to oppose a planned 65% hike in land and property taxes. Bursah Zarnubi, chairman of Indonesia’s association of district leaders, captured the sentiment succinctly: “This is a matter of fairness. The source of people’s unrest is economic issues, when distribution is unfair and economic development is not inclusive, is uneven and does not trickle down.”
Local officials are now seeking an urgent meeting with President Prabowo before the end of August, hoping to stave off further unrest. Bursah, whose district in South Sumatra depends on the central government for 90% of its budget, warned that the proposed cuts could jeopardize crucial projects, including a multi-trillion rupiah water irrigation system, as well as essential services like healthcare and education. Masinton Pasaribu, head of Central Tapanuli in Sumatra, echoed these fears, stating, “The people will certainly be angry.”
The Indonesian government, for its part, argues that the reforms will ultimately benefit the public through centrally funded initiatives. Finance Minister Sri Mulyani Indrawati pointed to programs like the nationwide free meals scheme and new infrastructure projects as evidence that the public would see gains at the regional level. Yet the numbers tell a complicated story: the budget for free meals to 83 million school children and pregnant women—a quarter of the population—is set to nearly double to 335 trillion rupiah ($20.5 billion) in 2026. While the economy has shown signs of resilience, growing 5.1% in the second quarter of 2025 (the fastest pace in two years), and foreign investment has increased by 2.6% year-on-year in the first half of the year, the underlying tension remains.
Analysts worry that Prabowo’s plan is simply shifting the burden from one part of the country to another. As Reuters notes, the debate is not just about economics, but about democracy itself. Decentralization and regional autonomy were hard-won reforms after the fall of Suharto’s New Order regime in 1998, meant to ensure more equitable development across Indonesia’s vast, resource-rich archipelago. Armand Suparman, executive director of Regional Autonomy Watch, warned, “Re-centralisation means regional autonomy as a reform agenda disappears. Democracy doesn’t just mean elections, but also public access to budget planning and policy.”
Meanwhile, in the United Kingdom, Chancellor Rachel Reeves is facing a different but equally daunting challenge: how to plug a £20 billion budget black hole without breaking her promise to keep headline tax rates unchanged. According to the Express, Telegraph, and other British outlets, public sector borrowing has surged to £60 billion since April, nearly £7 billion higher than the same period last year, despite the government collecting a record £100 billion in taxes in July alone. Of that, £2.6 billion came from Labour’s employer National Insurance hike, but the cost of servicing the national debt reached a staggering £7.1 billion for the month.
Economists are sounding the alarm. Elliott Jordan-Doak of Pantheon Macroeconomics told City A.M., “The litany of policy U-turns has only compounded the Government’s fiscal woes. We think the Chancellor will need to resort to ‘sin’ and ‘stealth’ tax hikes, duty increases, and a pensions tax raid in order to meet her fiscal rules if she wants to meet her pledge of keeping headline tax rates unchanged. The big picture remains that the public finances are in chronically weak condition.”
Reports suggest that Labour is considering reducing the maximum pension lump sum withdrawal from £268,275 to as low as £100,000 or even £40,000—a move that would primarily impact the wealthiest 25% of pension savers. The government is also weighing a capital gains tax on family home sales, but tax experts like Dan Neidle warn that such a step could “slash transactions, gum up housing chains, and could even collect less tax overall.” Paul Johnson, former head of the Institute for Fiscal Studies, agreed, warning it could “block up the entire housing market.”
Other measures under consideration include freezing income tax thresholds, which could add a £7,000 annual burden for high earners and push 1.4 million people into the top tax rate. Shadow Chancellor Mel Stride, speaking to the Daily Mail, accused Labour of reckless fiscal management: “Rachel Reeves is spending money she doesn’t have. Just like every Labour government in history, this one only knows how to tax more, spend more, and borrow more. Borrowing should be coming down, but under Labour it is higher than the same period last year. Starmer and Reeves are gambling with Britain’s future through a string of unfunded U-turns and a refusal to get spending under control. Tax rises in the autumn now look all but inevitable.”
On the other side, Treasury minister Darren Jones defended the government’s approach, arguing that reducing borrowing is essential to free up resources for schools, hospitals, and public services. “Far too much taxpayer money is spent on interest payments for the longstanding national debt. That’s why we’re driving down government borrowing over the course of the parliament—so working people don’t have to foot the bill and we can invest in better schools, hospitals, and services for working families.”
As both Indonesia and the UK grapple with the realities of fiscal constraint, the choices facing their leaders are stark. Whether through centralization or targeted tax reforms, the risk of public backlash is high. The coming months will reveal whether these governments can balance their books without losing the confidence of those they serve—or if the protests and warnings of the summer are just the beginning of a much larger reckoning.
