Property Tax Incentives for the Forestry Sector to Support Climate Change Mitigation in Indonesia

The current property tax on the forestry sector in Indonesia imposes a heavy burden on taxpayers which reduces the competitiveness of forest products and encourages deforestation amidst Indonesia's efforts to achieve net-zero emission targets.Forestry taxes should be able to balance business profitability and natural resource conservation through the strengthening of ecosystem services provided by forests.This study aims to provide alternative policy and improvements of the administration of property tax policy to support the carbon sequestration function of Indonesia's tropical rainforests and forestry industry.This research is a qualitative study that employs focus group discussions, in-depth interviews, and content analysis to collect data.The data analysis technique employed were successive approximation, illustrative method, and ideal types.Writers identified several policy and administration problems such as uncertain and complex land valuation, high tax rates, insignificant tax deductions, open interpretation of land classification, and numerous user charges.Alternative policies proposed are property tax incentives which consist of tax rate reduction and adjustment of deductions.The provision of tax incentives is expected to encourage reforestation efforts and reduce deforestation, therefore supporting the carbon sequestration of Indonesia's tropical rainforests in the context of climate change mitigation.