What is Carbon Tax and Its Effect on Car Selling Prices?

Have you heard about carbon tax? Many believe that this tax will affect the country's economy, especially Indonesia.

Not only on the economy, but it will also impact the selling price of cars. Considering that cars are among the vehicles that consume a lot of fuel.

Complete Explanation About Carbon Tax

If you are just learning about this tax, it is best to understand more about it. This tax has not yet been released in Indonesia, but it is set to be implemented in the coming years.

Therefore, it is important for you to understand this matter. So, later you will not be confused or surprised once it is officially enforced. Here is the complete explanation.

Definition

The increasing population in the world and the growth of industries can cause problems for the environment. Therefore, many countries around the world are seeking solutions to this issue.

Among the various ideas proposed, this tax is claimed to be an appropriate solution. Thus, it can be one way to tackle climate issues, from local to global scales.

Another name for carbon tax is carbon emissions tax or carbon tax. Its definition is a tax imposed on the use of fuel based on its carbon content.

Fuels that contain carbon elements are hydrocarbons, such as natural gas, petroleum, and coal. When burned, they will convert into CO2 (carbon dioxide) or other compounds.

According to the IBFD International Tax Glossary, carbon tax is a tax on fossil fuels. Additionally, this tax is classified as a pigouvian tax.

This means a tax on economic activities that generate negative externalities. Therefore, goods produced from carbon will incur additional costs.

Several countries have implemented this tax, with Finland being the first since 1990. After that, in 1991, Sweden and Norway followed. Then, India in 2010.

Japan and Australia in 2012, followed by the UK in 2013. Next, China in 2017. Most recently, South Africa and Singapore in 2019.

The use of carbon tax in these countries has proven to reduce emissions. In addition, it can also increase state revenue. Usually, the tax rate is imposed per ton of carbon dioxide.

Effects of Carbon Tax on Car Selling Prices

After knowing this, you might be wondering when Indonesia will implement it. Quoting from the website of the Ministry of Finance of the Republic of Indonesia, its implementation will start on April 1, 2022.

This implementation will be in the coal-fired power plant (PLTU) sector. The mechanism will be calculated based on cap and tax or emission limits.

Meanwhile, the rate is around 30 rupiah per kilogram of CO2e (carbon dioxide equivalent). This rate applies to the amount of excess emissions beyond the established cap.

Carbon Tax Friendly, Use Daihatsu!

If the carbon tax is officially implemented, the selling price of cars will increase. So, if manufacturers do not want to incur high taxes, their emissions must also be low.

For example, by replacing fossil fuels with newer energy sources or using electricity. This will certainly complicate vehicle manufacturers, including cars.

Moreover, recently the automotive industry in Indonesia has started to recover. If the carbon tax is implemented, they will have to maintain their industry.

One way to do this is by replacing carbon-based components. Thus, indirectly, it is like shutting down most of the fuel engine component industry.

As a car owner, you can also minimize carbon tax costs. One way is to switch to more fuel-efficient cars like Daihatsu Sigra.