<![CDATA[The planned reduction in Transfers to Regions (TKD) in 2026 raises the question of whether local governments can finance themselves from their own revenue. This study analyzes the effect of changes in TKD, economic growth, and regional tax potential on the fiscal independence of regencies and cities in West Nusa Tenggara (NTB) Province, Indonesia, during 2021–2025. This quantitative study uses secondary data from the Directorate General of Fiscal Balance and Statistics Indonesia for ten regencies and cities in NTB over 2021–2025 (a balanced panel of 50 observations). Fiscal independence is the share of own-source revenue (PAD) in total revenue, TKD is captured by its year-on-year percentage change, economic growth by the growth of constant-price GRDP, and tax potential by the regional tax target. Panel data regression is applied, and the Chow, Hausman, and Lagrange Multiplier tests select the random effect model. The results show that changes in TKD (p = 0.1775) and economic growth (p = 0.8233) have no significant effect, whereas regional tax potential has a positive and significant effect (p < 0.001). Jointly, the three variables are significant (F = 13.4796; p < 0.001; adjusted R² = 0.4331). The findings indicate that, during the period studied, fiscal independence is associated with the size of regional tax targets but is not shown to respond to fluctuations in TKD. Local governments should strengthen regional tax revenue.]]>
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