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Indonesia delays carbon tax implementation again, 1 week before enactment
The government could delay implementing the carbon tax for a second time.
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Climate clog: Smoke rises on Sept. 21, 2021 from chimneys at the Suralaya coal-fired power plant in Cilegon, Banten. (AFP/Bay Ismoyo)
T
he Finance Ministry is considering postponing the implementation of the carbon tax that was to become effective on July 1, the second delay after the government failed to implement the policy on April 1 as mandated by the Tax Harmonization Law of 2021.
Febrio Nathan Kacaribu, who heads the ministry’s Fiscal Policy Agency, cited unfinished work on the policy’s derivative regulations as a reason behind the move, as well as the prolonged global economic turmoil as a risk that needed to be taken into account.
“With all of these conditions, the government is again considering a review of implementing the carbon tax on July 1,” Febrio told reporters during an online press briefing on Thursday.
Read also: Carbon tax, despite paltry rate, has businesses on edge
The carbon tax policy is one of Indonesia’s plans to reduce emissions to meet its Nationally Determined Contribution (NDC) under the United Nations climate change framework. Presented at last year’s COP 26 summit and at the G20, of which Indonesia holds the presidency this year, it has also been the government’s showcase policy to illustrate the country’s commitment to addressing climate change.
Under the carbon tax, emissions are charged a minimum rate of Rp 30 (0.2 US cent) per kilogram of CO2 equivalent (CO2-eq) and is to be implemented alongside the cap-and-trade scheme. The tax is the amount companies must pay for surplus emissions above the government’s cap over a certain period of time.
The government plans to apply the carbon tax to coal-fired power plants before expanding it to other sectors and industries.
