Tax Incentives as Policy Instruments for Sustainable Development in a Comparative Analysis of LCGC and Electric Vehicle Schemes within Indonesia^s Green Economy Framework
Heppy Hyma Puspytasari, Ellectrananda Anugerah Ash-shidiqqi, Mutiara Dwi Sari, Dinda Ajeng Puspanita, Rendy Airlangga

Faculty of Law Universitas Negeri Surabaya

Abstract

This study examines the role of tax incentives as strategic policy instruments in advancing sustainable development within Indonesia^s green economy framework. Focusing on the Low-Cost Green Car (LCGC) and Electric Vehicle (EV) schemes, the research explores how fiscal incentives influence environmental sustainability, economic inclusivity, and industrial transformation. Using a comparative policy analysis, this paper evaluates the effectiveness of both incentive models in achieving key Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure), and SDG 13 (Climate Action). The analysis employs a qualitative-descriptive approach, integrating regulatory reviews, economic data, and policy performance indicators. Findings reveal that while the LCGC program contributes to energy efficiency and affordability, it offers limited carbon reduction compared to EV incentives, which show stronger alignment with Indonesia^s long-term decarbonization agenda. However, the high entry cost and limited infrastructure for EVs constrain inclusivity and equitable access. The study concludes that tax incentives for sustainable transport must balance affordability, environmental impact, and technological readiness to ensure coherence with the broader SDGs framework. Strengthening fiscal coordination, promoting innovation ecosystems, and expanding public-private partnerships are recommended to enhance the effectiveness of green tax policies. This research contributes to policy discourse on the intersection of fiscal instruments and sustainable mobility in emerging economies

Keywords: Tax incentives- Sustainable development- Green economy

Topic: Governance, Policy, and Education of Coastal Area