The Possibility of Implementing Carbon Levies in Indonesia Using Existing Law

Abstract

This qualitative research method aims to prove that without making new laws, Indonesia can still fulfill what is mandated in the Paris Agreement. Indonesia has ratified this agreement since 2016, so it must immediately take appropriate and concrete steps for reducing carbon dioxide emissions. A carbon tax is one of the most powerful tools to mitigate climate change, so many experts have suggested that Indonesia has to immediately implements a carbon tax as well. We suggest replacing the term of a carbon tax with carbon levy, to make it more flexible in its collection without having to enact new laws. A carbon tax is a corrective tax on goods that have a negative impact on their use, so there is a similarity between the philosophy of the carbon tax and the philosophy of excise. The weakness of the existing Excise Law is that it is only intended for tangible goods so that this Law cannot adopt carbon levies on activities that create a carbon footprint. This paper concludes that carbon levies in the form of excise taxes can be used to tax fossil fuels, while for activities that emit carbon dioxide, the levy uses the non-tax state levy mechanism.