This study discusses the serious issue of plastic pollution in Indonesia that damages the ecosystem and endangers human health. Although the government has implemented a number of policies to deal with plastic waste, the approach taken is still limited to downstream aspects and has not addressed the upstream problems. Tax incentives given to the plastic industry, such as tax holidays for up to 20 years and exemptions from import duties on raw materials, actually worsen the problem by encouraging the dominance of virgin plastic, which is more competitive in price. This policy creates negative externalities that are detrimental to the environment and society.
The financial impact of these tax incentives is significant, with potential tax revenue losses reaching USD 54 million per year, while economic losses due to plastic pollution are estimated at USD 450 million. Sectors such as fisheries, transportation, and tourism suffer major losses from pollution. The study shows a misalignment between economic policy and environmental goals, with tax incentives still dominating fiscal policy despite efforts to reduce plastic waste through a circular economy.
The proposed recommendations include a comprehensive review of tax incentive policies, a clear transition plan for plastic reduction, the implementation of an Extended Producer Responsibility (EPR) system, and a ban on the use of hazardous chemicals in plastic production. The study calls for collaboration between relevant ministries to implement more sustainable and effective measures to address the problem of plastic pollution and its negative impacts on the environment and society.
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