Head of Industrial and Transport Decarbonisation INDEF Green\nTransition Initiative (GTI) Andry Satrio Nugroho explained that there\nare several alternative policies before considering scrapping electric\nvehicle incentives. He said stopping incentives abruptly must be\ncarefully calculated to avoid slowing the adoption of electric vehicles\nin Indonesia. Clarity on taxation is also important to provide certainty\nfor both users and businesses.<\/p>\n
According to INDEF GTI calculations, there are several potential\nrevenue streams that could be developed by local governments. First, the\nimplementation of a Low Emissions Zone (LEZ). For example, in Jakarta\u2019s\ncentral business district Jalan Sudirman, the LEZ could generate Rp383\nbillion per year through LEZ charges. In addition to revenue, this\ncorridor policy would also serve as an instrument to control air quality\nin central Jakarta.<\/p>\n
\u2018This potential comes from a single area and could grow as the policy\nis expanded to other areas. The policy would not only have economic\npotential but would also have positive environmental and health impacts\nin central Jakarta,\u2019 Andry said at a Media Briefing and Launch of the\nWhite Paper on Local EV Taxation in Jakarta, on Thursday 21 May.<\/p>\n
Another policy that could be implemented is an emissions levy. Based\non INDEF GTI calculations, the emissions levy could boost national\nrevenue by Rp40 trillion per year. This figure would exceed the combined\ntaxes on plastics and sweetened beverages, and is even three times the\nalcohol tax. Revenue could be shared in a Revenue Sharing Fund linked to\nparticular economic and environmental performance, as an incentive to\ndrive green growth at the regional level.<\/p>\n
If it remains desirable to apply a tax on electric vehicles, the\ngovernment could implement it progressively based on tax liability.\nAccording to the calculations, the national share of electric vehicle\nownership in 2025 is dominated by the second ownership (i.e.,\nsecond-hand ownership) at 66.2 percent. The share for first ownership\nremains small at 4.0 percent. The total potential from second and\nsubsequent ownership tax amounts to Rp1.9 trillion per year.<\/p>\n
Andry added that in the future, the government must consider various\naspects related to the continuation of incentives, including the\nduration of the incentives, conditionality on industry and investment,\nand the level of EV adoption.<\/p>\n
\u2018Certainty about timing and calculation is necessary to avoid\nconfusing the business world. In addition, certainty can maintain public\ninterest in transitioning from fossil fuel vehicles to electric\nvehicles,\u2019 he said.<\/p>\n
In the same event, Head of Revenue II at the Jakarta Regional Revenue\nAgency (Badan Pendapatan Daerah, DKI Jakarta) Jimmi Pardede said\ndiscussions about EV taxation are ongoing. He noted that the local\ngovernment is under pressure due to reductions in transfer funding, so\nnew revenue options are being sought.<\/p>\n
Jimmi explained that one option is to impose EV tax progressively.\nThis approach is expected to keep the transition to electric vehicles on\ntrack while increasing the potential for local revenue.<\/p>\n
The tax could be levied based on the sale value. He gave an example:\nthe higher the vehicle value, the greater the tax liability. This is\nnecessary to ensure fairness for the public.<\/p>\n
\u2018The proposal for progressive taxation is very good. The essence is\nthat the implementation of this tax must be based on a sense of\njustice,\u2019 Jimmi said.<\/p>\n
Sunandar, Assistant Deputy for Electrification Development and\nGeology at the Coordinating Ministry for Economic Affairs, explained\nthat implementing tax incentives must consider industrial conditionality\nand the economic condition. Tax incentives must take into account how\nthe EV industry is developing, the number of users, and the supporting\ninfrastructure.<\/p>\n
\u2018When we talk about incentives, we cannot provide them forever. We\nneed to see how the ecosystem of the industry, factories, batteries, and\nthe number of users and buyers develop. Then we will assess whether the\nincentives are worthwhile to continue,\u2019 he said.<\/p>\n
Teguh Narutomo, Director of Regional Revenue at the Ministry of Home\nAffairs, said that calculations on the sustainability of EV taxation\nshould also touch institutional, sociological, legal, and philosophical\naspects. He noted that sociologically, for example, EVs are categorised\nas luxury goods and therefore should be taxed. Legally and\ninstitutionally, policy recommendations must consider the capacity of\nlocal and central governments to implement them.<\/p>\n
Teguh added that the central government has issued a circular\ninstructing regional governments to provide incentives for EVs. However,\nhe emphasised that regional governments possess technical authority in\nthis area.<\/p>\n
\u2018Minister of Home Affairs Regulation No.\u00a011\/2026 on EV taxation is a\nmandate derived from higher rules, i.e., Presidential Regulation 55\/2019\nand Presidential Regulation 79\/2023, not a regional demand. On certainty\nof implementation this is reiterated in Circular Letter of the Minister\nof Home Affairs No.\u00a0900.1.13.1\/3764\/SJ, which instructs regional\ngovernments to offer incentives in the form of tax exemptions. But\nregions do have fiscal autonomy in their operations,\u2019 he said. (H-2)<\/p>\n
The government is preparing VAT incentives for electric cars and\nsubsidies for electric motorcycles to reduce fuel consumption and\nstrengthen national energy resilience.<\/p>\n
The government ending the 0 percent tax incentive for EVs.<\/p>\n
When regional governments provide tangible incentives to EV users,\nthe domino effect is felt by supporting industries, particularly\nSPKLU.<\/p>\n
Some of the tax is borne by the government; there are scenarios with\n100 percent or 40 percent. A scheme is to be devised.<\/p>\n
Jakarta Governor Pramono Anung revealed the reasons for defending\nit.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/three-local-revenue-options-if-electric-vehicle-incentives-are-scrapped-1779542406", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }