Indonesia delays carbon tax till Jul 22 to help economic recovery

  • Indonesia is delaying the roll-out of its carbon tax to Jul 22 from Apr 22, a move that analysts say will help its economic recovery amid surging energy prices and support businesses.
  • In Oct 21, South-east Asia’s top economy initiated a new levy of as much as IDR30,000 per tonne of carbon dioxide equivalent (CO2e) for emissions generated by coal power plant operators beyond a set limit.
  • “The road map has not been finished and we are still preparing for a few regulations so that (the tax) can be implemented mid-year,” said Finance Minister Sri Mulyani early this week, noting that the government is seeking a balance between carrying out reforms and recovering the economy.
  • An official with the Finance Ministry’s Fiscal Policy Office said last week that the delay takes into account global developments, such as inflation and the war in Ukraine. Business players have voiced concerns over potentially higher power costs that can hurt industrial competitiveness.
  • The planned tax has been trialled on 32 operations. It also has a wider plan to impose a tax on carbon-emitting industries, including pulp and paper, cement and petrochemicals, but the tax structure has not been finalised.

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