The government is preparing to increase state revenue through an increase in Value Added Tax (PPN) become 12% on 2025. This policy is predicted to have a significant impact on the automotive sector, which will automatically increase the selling price of new motorized vehicles. However, experts propose more promising alternatives: implementation carbon tax on motorized vehicles.
Ahmad Safrudin, Executive Director of the Leaded Gasoline Elimination Committee (KPBB), stated that carbon excise could be a fair solution to increase state income while encouraging the reduction of carbon emissions. In a discussion entitled “Other Options VAT12%: Vehicle Carbon Excise Vehicle Emission Mitigation Notes for 2024” in Jakarta, Safrudin explained that carbon excise could open up new fiscal space without burdening all parties equally.
What is Carbon Tax?
Carbon excise is an additional tax imposed based on the level of carbon emissions from motorized vehicles. With this scheme, The government can apply two approaches: tax feebate And tax rebate.
- Tax Feebate: Additional tax for vehicles that have carbon emissions above the standard.
- Tax Rebate: Incentives for vehicles whose carbon emissions are lower than the set standards.
Safrudin proposed carbon emission standards as a reference for excise. For example, Four-wheeled vehicles such as sedans and MPVs are expected to meet maximum standards 118 g/km on 2025. For motorbikes, the proposed limit 85 g/km, while heavy vehicles such as buses and trucks are up to 1.500 g/km.
How Carbon Excise Is Implemented?
Vehicles with carbon emissions that exceed the standard will be subject to additional tax per gram of excess. As an illustration:
- An average MPV vehicle produces carbon emissions 200 g/km, beyond standards 118 g/km as big as 82 g. If every excess gram is subject to excise tax of IDR 2,25 million, then the total excise duty that must be paid reaches Rp 180 million. This will significantly increase the price of the vehicle on the market.
On the contrary, vehicles with carbon emissions below standard will receive incentives that can reduce their selling price. For example, electric cars with carbon emissions 60 g/km is entitled to a price reduction of up to Rp 135 million, making it more affordable than fossil fuel vehicles.
Economic and Environmental Benefits
The implementation of carbon excise not only generates significant state revenue, but also encourages people to switch to low-emission vehicles. According to Safrudin's calculations, the government has the potential to gain Rp 92 trillion per year from carbon excise, much larger than the VAT increase 12% which only produces an additional Rp 67 trillion.
“Carbon excise has a double impact. Apart from increasing state income, This policy also motivates vehicle manufacturers to develop more environmentally friendly technology," said Safrudin.
Although vehicles with high carbon emissions are still allowed to be sold, implementing this excise will make it much more expensive. On the contrary, Low-carbon vehicles will become more affordable, providing incentives for consumers to choose more environmentally friendly options.
With potential fiscal benefits and positive impact on the environment, Safrudin urged the government to consider implementing carbon tax as the main option. He emphasized the importance of this policy to make a real contribution to mitigating climate change while optimizing state revenues.
Why Carbon Taxes Are More Promising?
When compared with the increase in VAT, Carbon excise offers a more equitable solution. The tax burden is not imposed evenly, but rather based on the level of carbon emissions produced. Thus, People who choose low-emission vehicles will actually get financial benefits.
Safrudin hopes, through this policy, Indonesia can demonstrate a serious commitment to reducing carbon emissions and meeting global climate targets. “Why not choose a more profitable and environmentally friendly solution such as a carbon tax?” he concluded.
With the implementation of carbon excise, The government not only opens up opportunities for greater income, but also creating a fairer and more sustainable vehicle market. This policy could be a step forward in realizing environmentally friendly transportation in Indonesia.
