“The carbon tax begin to take effect on April 1, 2022, but still it (the government) follows the carbon roadmap related to climate change,” Sri Mulyani Indrawati said at a press conference in Jakarta on Thursday.
The Law on Harmonizing Tax Regulation (UU HPP) deals with the imposition of carbon tax aimed at restoring the environment.
The carbon tax is part of Indonesia’s commitment to lower carbon emissions by 29 percent on its own and 41 percent through international support by 2030 in accordance with the target of Nationally Determined Contributions (NDC), the minister noted.
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The tax will be imposed in stages and adjusted to carbon trading as part of the green economy roadmap to minimize the impact on businesses while lowering carbon emissions, she said.
“The basic notion is our acknowledgement that carbon has economic value so we will impose carbon tax through cap and tax trade mechanism,” Vice Finance Minister Suahasil Nazara said.
In the first stage in 2021, the government will develop a carbon trade mechanism and from 2022 to 2024, it will apply the tax to coal-fueled power plants (PLTU), based on the cap and tax mechanism, he informed.
From 2025 and beyond, carbon trade will be done fully and the carbon tax sector will be expanded in stages, in keeping with the sector’s preparedness, he added.
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