Depok, 26 November 2025 — An international discussion in a session entitled “Green Tax Policy and Sustainable Finance: Global Lessons for Indonesia” as part of the Symposium of 25 Years of Decentralization emphasized that fiscal and tax policies play a strategic role in promoting sustainable development, strengthening economic competitiveness, and reducing tax compliance gaps. The session featured three international and national speakers: Prof. Jerry Zhao (Zhejiang University, China), Prof. Haula Rosdiana (Faculty of Administrative Sciences, Universitas Indonesia), and Dr. James McMillan (Charles Darwin University, Australia).

The discussion opened with a presentation by Prof. Jerry Zhao, who emphasized that green fiscal policy is a vital instrument for climate change mitigation and long-term development sustainability. He explained that China is at the right stage to consider the implementation of a carbon tax, supported by economic stability and a low budget deficit. However, the success of such a policy is highly dependent on public ecological awareness, fiscal support, and a conducive political environment. To increase public acceptance, he recommended that the adoption of a carbon tax begin on a small scale and be complemented by social subsidy schemes. Furthermore, he highlighted the interprovincial eco-compensation model—such as environmental compensation between Anhui and Zhejiang—as a concrete example of fiscal policy that connects cross-regional funding to protect environmental quality. According to him, sustainable development goals can only be achieved if all stakeholders, including government, businesses, and society, are collaboratively involved in the green finance agenda.

The next focus shifted to the transformation of tax authorities in Australia. Dr. James McMillan explained that Australia has succeeded in reducing its tax gap from 30% to 7% over the past 25 years through significant investment in data analytics and tax technology. The Australian Taxation Office (ATO) has broad authority to collect and integrate data from various sources in real time to detect risks and improve compliance. Its approach prioritizes audits on high-risk groups such as large corporations and high-income individuals. The pre-populated tax data system allows tax authorities to send automatic alerts when suspicious data is detected. This success is supported by law enforcement with strict criminal sanctions for fraud perpetrators and tight internal supervision to reduce opportunities for corruption. McMillan emphasized that the combination of data strength, legal foundations, and technology must serve as the basis for tax reform—and that Indonesia needs to strengthen data access and dispute resolution mechanisms before implementing advanced technologies like those used in Australia.

In the Indonesian context, Prof. Haula Rosdiana stressed that tax policy is not merely a source of revenue, but an instrument to enhance productivity and national business competitiveness. She highlighted the need for restructuring tax policy and strengthening the governance of tax institutions to reduce economic burdens, time costs, and the psychological burden on taxpayers. To improve compliance and transparency, she proposed the implementation of a tax control framework as a prerequisite for granting tax incentives, ensuring that incentives truly target sectors that enhance productivity rather than merely supporting corporate cash flow. She also emphasized that future tax approaches should shift from cooperative compliance toward collaborative compliance, where tax authorities and taxpayers work together to achieve shared goals based on transparency.

The discussion noted that the success of tax technology is determined not only by its sophistication, but also by data quality, regulatory strength, and the integrity of law enforcement. Although Indonesia has begun adopting systems such as Coretax, the large contribution of the informal economy and data limitations remain major challenges. National data integration and the strengthening of risk-based audit capabilities were considered crucial steps to increase the tax-to-GDP ratio.

The session concluded with a shared understanding that fiscal and tax policies play a central role in building a competitive economy while safeguarding environmental sustainability. China’s experience in green finance, Australia’s tax administration transformation, and Indonesia’s tax reforms provide valuable lessons for designing a more efficient, fair, and nationally oriented tax system. Future collaboration among countries, academics, and policymakers will be an important foundation for strengthening the agenda of tax reform and green finance in Indonesia.