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Indonesia Eyes $1.7 Billion Windfall From Plastic, Emission Levy

  • Tax planned on vehicle emissions, plastic bags, sugary drinks
  • Measures needed to protect environment, finance minister says
Plastics Recycling at New Poly Recycling AG Facility
Photographer: Stefan Wermuth/Bloomberg

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Indonesia plans to impose excise duty on plastic bags, sugary drinks and vehicle emissions with the new levies expected to net the government about $1.7 billion in additional revenue annually.

The new measures, apart from bolstering tax collections, are aimed at tackling climate change as well as a growing prevalence of chronic diseases, Finance Minister Sri Mulyani Indrawati told lawmakers in Jakarta Wednesday.

“This proposal will face resistance from industry and businesses but we have to implement it to protect our environment,” Indrawati said of the plastic bag tax. “The government wants to support more environmentally-friendly products,” she said.

The tax on vehicles emitting carbon dioxide will rake in 15.7 trillion rupiah ($1.1 billion) a year, according to a government estimate. Tariffs on sugary beverages from sweetened tea to soda and energy drinks will earn 6.25 trillion rupiah and another 1.6 trillion rupiah will come from the levy on plastic bags.