In a bold push for fiscal reform, Indonesia’s think tank, the Center of Economic and Law Studies (Celios), has unveiled a groundbreaking set of 10 new tax measures designed to inject up to Rp388.2 trillion (US$25 billion) into state coffers. Announced on August 12, 2025, during the launch of their provocative study titled “Dengan hormat, Pejabat Negara: Jangan menarik pajak seperti berburu di Kebun Binatang” (“Don’t collect taxes like hunting in a Zoo”), these proposals aim to overhaul the nation’s revenue system. With Indonesia’s tax-to-GDP ratio lagging at just 10.4% in 2024—the lowest in Southeast Asia—this initiative could mark a turning point for equitable economic development, funding critical infrastructure, environmental protection, and social programs. But what do these taxes mean for businesses, the wealthy, and everyday Indonesians? Let’s dive into the details and explore the potential ripple effects.
Why Indonesia Needs a Tax Overhaul:
Indonesia’s economy, one of Asia’s fastest-growing, faces a persistent challenge: a narrow tax base that relies heavily on a small pool of registered taxpayers. This has resulted in chronic underfunding for public services, from healthcare to renewable energy projects. Celios’ proposals come at a crucial time, as global pressures like climate change and digital transformation demand innovative funding sources. By targeting untapped areas such as wealth concentration, environmental impacts, and digital economies, these taxes could promote “tax justice,” shifting the burden from low-income earners to high-net-worth individuals and polluting industries.
As Celios policy director Media Wahyu Askar explained during the Jakarta event, “We want to spark a public debate so that we can see the bigger picture that there are other strategies that can significantly boost our tax potential.” This approach not only addresses fiscal shortfalls but also aligns with sustainable development goals, potentially reducing inequality and supporting Indonesia’s green transition.
The 10 Game-Changing Tax Proposals: A Breakdown
Celios’ recommendations focus on high-impact, progressive taxes that could generate substantial revenue while encouraging responsible behavior. Here’s a detailed look at each, including estimated yields:
| No. | Tax Type | Estimated Revenue (Rp trillion) | Key Focus Area |
|---|---|---|---|
| 1 | Wealth tax on the 50 richest Indonesians | 81.6 | Targeting ultra-wealthy for equity |
| 2 | Carbon tax | 76.4 | Penalizing emissions to combat climate change |
| 3 | Coal production tax | 66.5 | Regulating extractive industries for sustainability |
| 4 | Windfall profit tax on extractive industries | 50 | Capturing unexpected profits in mining and oil |
| 5 | Biodiversity loss tax | 48.6 | Protecting ecosystems from development impacts |
| 6 | Digital tax | 29.5 | Taxing tech giants and online platforms |
| 7 | Higher inheritance tax | 20 | Reducing intergenerational wealth gaps |
| 8 | Third-home ownership tax | 4.7 | Discouraging speculative real estate hoarding |
| 9 | Capital gains tax on shares and financial assets | 7 | Taxing investment profits for broader revenue |
| 10 | Excise on sugar-sweetened beverages | 3.9 | Promoting public health by curbing sugary drinks |
These figures highlight a strategic mix: environmental taxes (like carbon and biodiversity) could fund green initiatives, while wealth and inheritance levies address social disparities. For instance, the wealth tax alone could rival Indonesia’s annual education budget, providing a massive boost to human capital development.
Economic and Social Impacts: A Path to Tax Justice?
Beyond revenue, Celios emphasizes that these taxes could foster fairness. Lower-income groups currently shoulder a disproportionate load through indirect taxes like VAT, while the super-rich benefit from loopholes. By implementing measures like the digital tax—mirroring global efforts by the OECD—Indonesia could level the playing field and attract foreign investment in tech sectors.
However, challenges loom. Businesses in coal and extractive industries might face higher costs, potentially leading to job shifts toward renewables. On the positive side, taxes on sugar-sweetened beverages could improve public health outcomes, reducing healthcare spending long-term. Wahyu noted, “These measures would help achieve tax justice, noting that lower-income groups currently bear a heavier tax burden relative to their income than the super-rich.”
Government Response and Next Steps
The Finance Ministry has responded positively, with expert staffer Yon Arsal highlighting the innovative nature of proposals like the biodiversity tax. “We will study these proposals further, particularly those in the income tax sector. If implemented properly, they could work optimally,” Arsal stated. Submitted directly to Deputy Finance Minister Anggito Abimanyu, these ideas could influence the 2026 budget, especially as Indonesia eyes post-pandemic recovery.
Critics, however, warn of implementation hurdles, such as administrative costs and potential evasion by the elite. Public debate, as Celios urges, will be key to refining these ideas.
Could These Taxes Propel Indonesia’s Economy Forward?
If adopted, Celios’ proposals could elevate Indonesia’s tax-to-GDP ratio closer to regional peers like Thailand (16%) or Malaysia (12%), unlocking funds for sustainable infrastructure and poverty alleviation. In a world grappling with climate crises and digital divides, these taxes position Indonesia as a forward-thinking leader in Southeast Asia. As debates heat up, stakeholders from businesses to citizens must weigh the benefits of a more equitable, resilient economy.
