In order to increase government revenues while reducing greenhouse gas emissions, the government plans to impose carbon taxes. In the macroeconomic framework and in the Fiscal Principles of 2022, the government has prepared two alternatives to the carbon tax.
First, the government plans to use existing instruments at the central level such as excise taxes, income taxes (PPh), value added taxes (PPN), luxury taxes (PPnBM) or non-tax state revenues (PNBP) or local levels such as vehicle taxes (PKB) and fuel taxes.
Second, by revising the General Tax System Act (UU SRC), the government can also create a carbon tax as a specific new instrument. The tax can target emissions from economic activity or other sources. In the macroeconomic framework and the fiscal policy principles of 2022 it says: “In many countries carbon taxes are levied on fossil fuels, which are based on their gas emission potentials.”