JAKARTA • Indonesia's Parliament yesterday told the government to tax a wider range of plastic products than it had proposed, but held off on plans to levy sweet drinks and polluting vehicles.
The government had at first proposed to impose excise taxes on plastic bags, sweetened beverages and vehicles that emit carbon dioxide to discourage their use, cut waste and reduce pollution in South-east Asia's largest economy.
The government proposal came amid weak tax collection after the economy grew at its slowest pace in three years last year.
Indonesia had a nearly US$15 billion (S$21 billion) revenue shortfall last year due to weak company profits and falling exports.
Finance Minister Sri Mulyani Indrawati said after the parliamentary hearing that she would have to redesign her policy, as lawmakers' approval was for duties on a wider range of plastic products than originally asked for.
Dr Sri Mulyani's initial proposal was to impose an excise tax of 200 rupiah (S$0.02) per bag on plastic carriers, which she first submitted to Parliament in 2017. Such a levy, though small, could halve Indonesia's consumption of plastic bags to 53,533 tonnes a year, she said.
"We will consider all incoming aspirations because we don't want to create more burden in the current weak economic conditions," she said after the hearing.
According to a Science journal report in 2015, only China dumps more plastic waste into the sea than Indonesia, an archipelago nation of 260 million people.
The Indonesian Olefin, Aromatic and Plastic Industry Association rejected Parliament's move, with its secretary-general Fajar Budiyono suggesting that the government should apply duties on only imported plastic goods.
"It will be very difficult to apply excise on end products made of plastic... Too many small players," Mr Budiyono said.
Dr Sri Mulyani had also asked to levy taxes ranging from 1,500 rupiah to 2,500 rupiah per litre on sweetened beverages to control the rise of diabetes and obesity.
Another proposal was to impose duties on new vehicles that emit carbon dioxide.
Parliament wants the Finance Minister to further explain the plans to implement excise taxes on sweet drinks and vehicles, said Mr Dito Ganinduto, chairman of Parliament's finance commission.
REUTERS
