ANALISIS KEBERHASILAN SKEMA PENERAPAN PAJAK KARBON DI FINLANDIA DAN EVALUASI SKEMA CAP AND TAX DI INDONESIA

Abstract

This study examines Finland’s carbon tax implementation and its potential application in Indonesia. Introduced in 1990 and modified until 2013, Finland’s carbon tax, combined with energy taxation, successfully reduced emissions by 48% by 2005. A key factor in its success was the "tax shifting package," which used tax revenues to lower income taxes, reducing economic burdens. Indonesia introduced a carbon tax in 2021, initially targeting coal-fired power plants. It employs a "cap and tax" mechanism integrated with carbon trading but faces challenges such as low tax rates and economic pressures on industries. To enhance effectiveness, this study recommends that Indonesia adopt Finland’s approach by raising tax rates and directing a separate carbon tax with carbon trade for better incentives. These measures could help Indonesia achieve its 2030 NDC targets and net zero emissions by 2060.