Carbon tax scheme awaits regulation and readiness of the electricity sector


Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kacaribu. Source: Ministry of Finance

Jakarta – Carbon tax will be implemented when the regulation and electricity sector as the first sector to be subject to a tax is ready, officials said Saturday (1/4). The Ministry of Finance is currently drafting various technical regulations for implementing the carbon tax, such as tariffs and the basis for imposition, methods for calculating, collecting, paying or depositing, as well as a carbon roadmap.

The Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kacaribu, in an official statement said, the carbon market scheme, including related laws and regulations, which will complement the implementation of the carbon tax is in the process of finalisation.

“This readiness is important so that the core objective of implementing a carbon tax is to provide an optimal impact,” he said.

Risks and dynamics of the global economy are currently very volatile due to the Russia-Ukraine conflict, as well as the acceleration of normalisation of monetary policy in developed countries, especially the United States (US). These two factors resulted in a very high spike in global commodity prices, especially energy and food commodities. This condition puts pressure on inflation in many countries in the world, including Indonesia.

“With these developments, the current government’s focus is ensuring the availability and stabilisation of energy and food prices in the country, including providing various forms of social protection to protect the poor and vulnerable from the impact of price increases,” said Kacaribu.

He explained that efforts to overcome the impacts of climate change are grouped into aspects of climate change mitigation and adaptation. The mitigation aspect emphasises efforts to reduce greenhouse gas emissions, then for climate change adaptation efforts prioritise efforts to reduce climate vulnerability and increase resilience.

“These efforts require support from the funding side, either through government spending schemes (state or regional budgets) or other funding sources in accordance with regulations,” said Kacaribu, adding that to further strengthen of climate-related funding capacity, the government issued Presidential Regulation Number 98 of 2021 concerning the economic value of carbon in October 2021, which regulates carbon pricing schemes (carbon trading and carbon offsets), result-based payments, levies on such as carbon taxes and non-tax revenues, as well as other mechanisms. (Hartatik)


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