Government Claims Minimal Effect of Carbon Tax on Industry

Jakarta, CNN Indonesia – The government claims that the collection of carbon tax will have minimal impact on domestic industries. This is because the implementation of this policy is still limited and the rates tend to be low.

“The impact of this carbon tax will be limited because the imposition is still with a closed stamp and the tariff is still conservative,” said Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance Febrio Kacaribu at the October 2021 edition of the APBN KiTa press conference, Monday (25/10).

For example, in the initial implementation of this policy, the government only targeted the coal-based steam power plant (PLTU) business. While other businesses have not been charged.

“The initial phase in 2022-2024 is limited to the coal-fired power plant sector, which actually already has an ongoing carbon market,” he added.

In addition, the government imposes a fairly low carbon tax rate, namely Rp 30 per kilogram of carbon dioxide equivalent (CO2e). The value is only half of the initial plan of Rp 75 per kg CO2e.

Febrio stressed that the implementation of the carbon tax collection must be carried out by Indonesia next year because the government has put it in the Law on Harmonization of Tax Regulations (UU HPP). Likewise with the carbon market implementation plan.

“We will continue to build the carbon tax in the future according to the development of the carbon market,” he said.

In addition, this policy is a part of the government’s plan that has committed to reducing carbon emissions in Indonesia. The target is to reduce carbon emissions by 29 percent with their own efforts and 41 percent if they get international support.

Deputy Minister of Finance Suahasil Nazara added that the imposition of a carbon tax and the implementation of a carbon market is expected to encourage industry players to switch from the fossil energy business to new and renewable energy (EBT). Because, this energy is more environmentally friendly.

“So, this is not only what we see this year, but this is part of our reform to improve the green economy in Indonesia in the future,” he said.