DoF studies carbon tax system in Indonesia

AS PART OF its efforts to improve the country’s tax system, the Department of Finance (DoF) is studying Indonesia’s experience with implementing carbon pricing.

Finance Undersecretary Zeno Ronald Abenoja told an online business forum hosted by the Manila Times last week that the DoF was conducting engagement research on carbon tax or pricing instruments. carbon.

“We are engaging potential partners to look at options for the Philippines. What this study will really involve is having a basic understanding of where we are now and given that understanding of the situation in Philippines, we will look at other countries’ experiences,” he added.

He said the agency was considering several options as the country would benefit from the experiences of other countries and draw on the knowledge of multilaterals to offer guidance on what the options might be for the country.

“They were one of the first countries in the region to take a full step in this direction. It was available to them, I think, a few years ago, but the implementation, as I understand it, has been extended , “said the Indonesia official.

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The finance department can identify the difficulties and factors that Indonesia is now considering given the first steps it has taken, Abenoja said.

“And that will provide us [with] more ideas on the range of options available to us. It can be something similar to Indonesia, a slight modification or another type of instrument,” he pointed out.

President Ferdinand Marcos Jr. said in his first State of the Nation Address that the government would implement sound fiscal management under his leadership.

“Tax administration reforms will be put in place to increase revenue collection,” he said.

The Development Budget Coordinating Committee said the government’s revenue program for this year, which amounts to 3.3 trillion pesos, or 15.2 percent of the country’s gross domestic product, will be achieved through the continued enforcement of tax law and administrative reforms, supported by a strong growing economy.

Finance Secretary Benjamin Diokno previously said the Marcos administration was pursuing the imposition of taxes on single-use plastics and studying carbon taxation as potential sources of revenue.

This is one of the measures proposed in the new administration’s medium-term fiscal framework, which aims to improve tax administration, strengthen the fairness and efficiency of the country’s tax system and promote environmental sustainability to combat climate change.

In a working paper published in December 2018 by the Philippine Institute of Development Studies, the authors stated that carbon taxation “is a bold step for a developing country like the Philippines because such types of taxes regulations can thwart growth policies due to the obvious increase in production costs”. heavy fossil fuel industries.

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