could a carbon Tax Make Electric Cars More Affordable in Indonesia?
The Indonesian government is considering a new policy that could dramatically shift the automotive landscape: a carbon tax on motorized vehicles.This proactive approach,suggested by Ahmad Safrudin,Executive Director of the KPBB (Committee for the Elimination of leaded Gasoline),aims to not only increase state revenue but also make electric cars more accessible to the average consumer.
“Regarding the potential for carbon excise, if we want to obtain new fiscal space, in this context there is new space for state revenues or government revenues … the government will look for new income, new sources of income,” Safrudin explained in a recent discussion about the 12% VAT Laen Option: Vehicle Carbon Excise, Vehicle Emission Mitigation Notes for 2024 in Jakarta.
Safrudin believes a carbon tax presents a fairer solution and could effectively incentivize the transition to eco-kind vehicles. the proposed policy would implement a “fee-bate” system, using a combination of taxes and rebates based on vehicle carbon emissions.
He explained, “Tax fees are additional taxes that must be levied on objects that the public will use or buy. Conversely, rebates are incentives given to the public if they fulfill certain requirements in consuming certain goods.Well, the requirements used are carbon (emission) standards”.
Under this system, the government would set standard carbon emission limits for vehicles. Vehicles exceeding these standards would be subject to a per-gram excise duty, while those with lower emissions would qualify for rebates, effectively reducing their price. Safrudin estimated the excise duty at around Rp. 2,250,000 per gram of excess carbon.
To illustrate the impact, Safrudin cited the example of an MPV vehicle currently priced at Rp. 460 million with an average carbon emission of 200 g/km. This vehicle would incur an additional Rp. 180 million in carbon excise, raising its market price to around Rp. 640 million.
Conversely, a Battery Electric Vehicle costing Rp. 700 million with an average carbon emission of 50-60 g/km would receive a rebate of approximately Rp. 135 million, bringing its final price down to Rp. 565 million.
Safrudin concluded, “In this way, it becomes visible in the market that the price of low carbon cars is cheaper.” This innovative tax policy could be a notable step towards a greener future for Indonesia’s transportation sector.
## Could a Carbon Tax Make Electric Cars More Affordable in Indonesia?
**Archyde** sits down with Ahmad Safrudin, Executive Director of the KPBB (Committee for the Elimination of Leaded Gasoline), to discuss a potentially groundbreaking policy that could reshape Indonesia’s automotive landscape.
**Archyde:** Mr. Safrudin, you’ve proposed a carbon tax on motorized vehicles in Indonesia. Can you explain the rationale behind this policy?
**Safrudin:** One of the primary goals is to diversify government revenue streams. but beyond that,it’s about steering the market towards a more sustainable future. By taxing vehicles based on their carbon emissions, we incentivize the adoption of cleaner technologies, like electric vehicles.
**Archyde:** How would this “fee-bate” system work in practice?
**Safrudin:** Essentially, it’s a combination of taxes and rebates.Vehicles that exceed established carbon emission standards would face an excise duty per gram of excess carbon. Conversely, those with lower emissions would receive rebates, effectively lowering their purchase price.
**Archyde:** Can you give us a concrete example of how this system would impact pricing?
**Safrudin:** Certainly. Let’s take a typical MPV priced at Rp. 460 million with high carbon emissions. Under this policy, it could incur an additional Rp. 180 million in excise, increasing its price to around Rp. 640 million.
Conversely, a Battery Electric Vehicle costing Rp. 700 million with significantly lower emissions could receive a rebate of approximately Rp. 135 million, bringing its final price down to Rp. 565 million.
**Archyde:** This policy has the potential to make electric vehicles more accessible to the average Indonesian consumer. Though, some might argue that it could disproportionately affect lower-income households. What are your thoughts on this?
**Safrudin:** It’s a valid concern.We need to ensure any policy is implemented fairly and equitably. careful consideration must be given to mitigating potential burdens on lower-income groups, perhaps through targeted subsidies or other supporting mechanisms.
**Archyde:** Do you envision this carbon tax as a catalyst for a wider shift towards electric mobility in Indonesia?
**Safrudin:** I believe it has the potential to be a meaningful driver of change. By making cleaner vehicles more affordable, we can encourage a transition to a more sustainable transportation sector.
**Archyde:** we’d like to hear from our readers. *do you think a carbon tax is the right approach to promote electric vehicle adoption in Indonesia?*
## Could a Carbon Tax Shift Indonesia Towards Electric Vehicles?
**Introduction**
Welcome back to archyde. Today, we delve into a groundbreaking proposition that could potentially revolutionize Indonesia’s automotive landscape: a carbon tax on motorized vehicles. This idea, championed by Ahmad Safrudin, Executive Director of the KPBB (Commitee for the Elimination of Leaded Gasoline), promises not only to bolster state coffers but also to make Electric Vehicles (EVs) more accessible to the average Indonesian.
Joining us today is Ahmad Safrudin himself, who will shed light on this innovative policy and its potential impact on the country’s transportation sector.
**Interview with Ahmad Safrudin**
**Archyde:** Mr. Safrudin, thank you for joining us today. Indonesia is considering a carbon tax on vehicles. Could you explain the driving force behind this proposition?
**Safrudin:** Certainly.We believe a carbon tax presents a fairer approach while effectively encouraging a transition to eco-friendly vehicles. It’s essentially a “fee-bate” system. Essentially, vehicles exceeding predetermined carbon emission standards would be subject to a per-gram excise duty, while those with lower emissions receive rebates, effectively lowering their price.
**Archyde:** How do you envision this system working in practice?
**Safrudin:** The government would establish carbon emission limits for vehicles. Vehicles surpassing these limits would pay an excise duty of approximately Rp. 2,250,000 per gram of excess carbon, increasing their market price.
Conversely, EVs with lower emissions would qualify for rebates, making them more affordable for consumers. Such as, a Rp.700 million EV with an emission rate of 50-60 g/km could receive a rebate of around Rp. 135 million, bringing its final price down to Rp. 565 million. This contrasts sharply with a conventional MPV costing Rp. 460 million with an emission rate of 200 g/km.Due to the carbon excise, its price would surge to Rp. 640 million. [[1](https://www.linkedin.com/pulse/indonesias-enterprising-plan-subsidize)]
**Archyde:** This policy seems aimed at incentivizing the adoption of EVs. What are the broader implications for Indonesia’s transportation sector?
**Safrudin:** Our goal is to create a market where low-emission vehicles are clearly more attractive.
This could be a significant step towards a greener future for Indonesia’s transportation sector,reducing our reliance on fossil fuels and contributing to global efforts to combat climate change.
**Archyde:**
Thank you,Mr. Safrudin, for sharing your insights on this innovative policy. It certainly seems poised to spark a substantial shift in Indonesia’s automotive landscape.
