The Urgency of Implementing Carbon Tax on Jakarta’s Air Quality (Tax Incentives as Moderation Variable)

Accounting Department, Faculty of Economics and Communication, Bina Nusantara University, Jakarta, 11480 Indonesia

Abstract

On September 4, 2023, Jakarta was declared the sixth most polluted major city, causing many people to suffer from acute respiratory infections (ARIs). The purpose of this research is to evaluate the importance of implementing a carbon tax for air quality in Jakarta, drawing on research journals from developed countries (Finland and Sweden) that have successfully applied a carbon tax for approximately 30 years, and to discuss the significance of tax incentives in the application of a carbon tax. Data analysis was conducted using a systematic review method by comparing and summarizing the results of primary research studies to present more comprehensive and balanced facts (Siswanto, 2010). Data presentation from presenting data of previous studies on the impact of carbon tax implementation on other countries to arrive at a conclusion that can address the research problem at hand. The results of this research show that a carbon tax can be an effective policy in efforts to mitigate carbon emissions in both developed and developing countries around the world, including Indonesia. Therefore, the implementation of a carbon tax should be supported by additional policies like tax incentives to ease the challenges of its implementation.