Investigating Consumer’s Attitudes Toward New Carbon Tax Regulation in Indonesia

Abstract The Indonesian Government’s 2021 initiative to curb carbon emissions through carbon tax aims to influence the behavior of firms and consumers, particularly, those reliant on fossil fuels. Simultaneously, the carbon tax is envisaged as a means of generating state income and facilitating environmental investments. This research investigates Indonesian consumers’ attitudes toward the carbon tax through a representative survey, analyzing awareness, acceptance, and support levels as indicators and utilizing Structural Equation Modelling (SEM) with Partial Least Squares (PLS) program. The study explores opinions on the climate crisis and carbon tax, with a focus on Greater Jakarta. Preconceptions of climate change and their influence on attitudes are examined, along with socio-demographic characteristics shaping consumer behaviours. Findings reveal a heightened climate crisis awareness among the participants, however, a quarter remain unaware of the carbon tax enactment. Most consumers accept the tax, recognizing personal and industry responsibility for carbon reduction. Many are willing to contribute with tax rates of 1% to 3%. Policy recommendations include fostering political trust, progressive taxation on fossil fuels, and government incentives for carbon reduction. The study underscores the link between awareness, acceptance, and support for carbon tax implementation, suggesting further research on additional support indicators, including political trust.