Indonesia's car sales tax cut may harm the environment, requiring another policy to reduce emissions

By Haryanto, Researcher, The Purnomo Yusgiantoro Center
Filda Citra Yusgiantoro, Senior Researcher, The Purnomo Yusgiantoro Center

Southeast Asia’s largest economy, Indonesia, has provided a tax incentive in the form of a cut in car sales tax to help the country’s automotive industry recover from the COVID-19 pandemic impacts. However, this tax cut could damage the environment as more cars on the streets will increase carbon emissions.

Indonesia’s car sales

Indonesia is the second-biggest…

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