The carbon tax becomes an instrument to achieve the objective NDC, NZE: Nazara

The carbon tax that we put in the tax harmonization law (UU HPP) is not a tax on emissions

Jakarta (ANTARA) – Deputy Finance Minister Suahasil Nazara has said carbon tax has become an instrument to achieve the 2030 Nationally Determined Contribution (NDC) target as well as Net Zero Emission (NZE) or zero emissions by 2060.

According to the latest NDC document, Indonesia aims to reduce emissions by 31.89% through its own efforts and 43.20% with international support by 2030.

At a media rally at the Ministry of Finance office here on Friday, Suahasil Nazara stressed that the carbon tax regulations contained in the Tax Harmonization Act (UU HPP) were not a carbon emissions tax. carbon emitted by commercial entities.

“The carbon tax that we put in the tax harmonization law (UU HPP) is not a tax on emissions. If we carry out economic activities, we emit carbon emissions, because as long as emissions go out, we have to pay taxes, that is, not that. The carbon tax is an instrument that we will use to achieve net zero emissions,” Nazara asserted.

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If a company emits carbon emissions above the standard set in its sector, it can then choose between two options.

First, pay carbon taxes to the state or, second, look for carbon converters on the carbon market.

“If you look it up in the carbon market, that means the business entity is buying carbon from the carbon market. Therefore, there must be a carbon market,” he remarked.

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In line with this effort, the government, through the Financial Services Authority (OJK), is preparing a carbon trading infrastructure through the carbon exchange, in accordance with the issuance of the Minister of Finance’s Regulations. Environment and Forestry of the Republic of Indonesia Issue 21 of 2022 on Implementing Economic Values ​​of Carbon.

The regulations of the Ministry of Environment and Forests state that the development of carbon trading infrastructure through the carbon exchange is conducted by developing carbon trading infrastructure, regulating the use of state revenues from carbon trading and/or administering carbon transactions.

With the third largest rainforests in the world and spanning an area of ​​125 million hectares, Indonesia has vast potential to lead the carbon market which is estimated to absorb 25 billion tons of carbon.

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