Fiscal legitimacy of environmental taxation: challenges for green growth policy

In Indonesia the fiscal legitimacy of environmental taxation has not received serious attention from tax experts. This is proved by the limited number of studies investigating it. There are at least three interesting perspectives. First, the Indonesian perspective as a country, this research is very necessary and the results are awaited in order to get answers to the failure of Indonesia in application of environmental taxes. Second, policy maker perspective, the result of this research is needed to build policy based on evidence and Third, scientific perspective to introduce contemporary tax paradigm that should be well understood by government and society. It is in this context that the tax essence adequately can be well known in the structure, the posture of state levies and its impact on the productivity and competitiveness of society. This research aims to explain the implications if the government implements new environmental taxes (e.g. environmental taxes) and challenges of fiscal legitimacy from environmental taxes within the framework of green growth policy. By using constructivism paradigm, this research is done through documentation and literature study, and technical data analysis in the form of meta-analysis. The research results show that there are some pseudo environmental taxes and charges applied in Indonesia. That is, if the government impose a new tax type, then the government will add compliance costs and distort entrepreneur cash flow. However, if the government can manage revenue from environmental taxes and charges through good spending quality, it will create tax justification that will rise the tax trust. Therefore, spending quality should be done transparently, accountably and consistently, to ensure that environmental taxes that do not cause high economic costs, do not reduce competitiveness, and ensure the stability of state revenues. Thus, the restructuring, convergence and harmonization of environmental taxes and charges must be conducted in order to achieve a connection between tax payments and inclusive and sustainable economic growth can be created.