Proposed Biodiversity Loss Tax for Indonesia

The Indonesian government is reviewing a proposal for a biodiversity loss tax aimed at activities that destroy natural habitats. The idea follows satellite data showing a net deforestation of 175,400 hectares in 2024, nearly three times the area of Jakarta. The tax would apply to land clearing for plantations, mining, or infrastructure projects.

Indonesia ranks second worldwide in megabiodiversity, hosting over 9% of the world’s flowering plants, 15% of mammals, and 17% of bird species. Most forest loss occurs in secondary forests that take decades to recover, reducing ecosystem quality even when green cover appears unchanged. Rising fiscal demands have prompted the search for a fiscal tool that internalizes environmental costs into damaging economic activities.

Revenue from the tax is intended for three core goals: rehabilitating degraded forests with ecologically appropriate planting, strengthening indigenous community rights that have proven effective in forest protection, and financing the transition to a green economy. Transparent implementation could boost state revenue while mitigating ecological losses. Authorities still need to define taxable objects to avoid double taxation.