Carbon Tax Is The First Step Towards A Green Economy, Indonesia's Competitiveness Is Claimed To Increase

Illustration (Photo: Doc. Antara)

JAKARTA - The government through the Minister of Finance (Menkeu) Sri Mulyani said that the carbon tax policy was one of the initial stages in the road map towards a green economy.

"This step supports increasing Indonesia's competitiveness at the global level and at the same time shows our commitment to the challenge of global climate change," he said in a virtual press conference, Wednesday, October 27.

According to the Minister of Finance, what the state is trying to do through the imposition of a levy on exhaust emissions is believed to have a positive impact, not only from an environmental aspect but also from an economic perspective.

"This is also designed to provide greater added value to the Indonesian economy," he said.

Furthermore, the state treasurer explained that the government would continue to carry out structural reforms to build and strengthen the foundation of the national economy.

"The tax system is strengthened by the HPP Law (Harmonization of Tax Regulations) which reorganizes the tax system, so that the principles of justice, simplicity, efficiency, legal certainty, benefit and to safeguard the national interest in the midst of globalization can be created," he said.

Menkeu mentioned that in the short term, these efforts are in line to become an inseparable part of efforts to recover the economy and at the same time increase fiscal consolidation.

"The HPP Law is intended to strengthen Indonesia's taxation foundation in facing challenges both in Indonesia and globally," he said.

The Minister of Finance added that reforms in the field of tax administration also include a voluntary disclosure program for taxpayers, as well as the expansion of the tax base which aims to build justice and equality.

"Through improving policies and regulations, the government wants the fields of Income Tax (PPh), Value Added Tax (PPN) as well as excise and carbon taxes to make Indonesia one step ahead in responding to the challenges that exist," he said.

For information, the withdrawal of the carbon tax levy will take effect on April 1, 2022. As an initial stage, the government is targeting Steam Power Plant (PLT) business activities that produce by burning coal. Meanwhile, the tariff charged is IDR 30 per kilogram of carbon dioxide equivalent (CO2e) or equivalent units.