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\hypersetup{pdftitle={The Optimal Carbon Tax Scheme under the Influence of Corruption:  theoretical and Experimental Support for Indonesia },pdfauthor={Deden Iskandar},pdfsubject={Tropentag 2010: Abstract},pdfkeywords={Carbon tax, climate change, compliance, corruption , environment},pdfpagemode=None,colorlinks=true}
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\parbox[b]{13.4cm}{\centering \large{\textbf{Tropentag, September 14-16, 2010, Zurich}}\\[1ex] \Large{``World Food System  ---\\A Contribution from Europe''\\[2ex]}}
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\Large{\textbf{The Optimal Carbon Tax Scheme under the Influence of Corruption:  theoretical and Experimental Support for Indonesia \footnote{\textbf{Contact Address:} Deden Iskandar, Center for Development Research (ZEF), Economic and Technological Change (ZEF B), Walter-Flex-Str 3, 53113~Bonn, Germany, \mbox{e-mail}: \email{deden.dinar.iskandar@uni-bonn.de}}\\[0.8ex]}}
\normalsize{\textsc{Deden Iskandar}}
\end{center}
\begin{itemize*}
\item[]{\small{\textit{Center for Development Research (ZEF), Economic and Technological Change (ZEF B), Germany}}}
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\index[author]{Iskandar, Deden}
\begin{center}
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\textbf{Abstract}
\begin{abstract}
\normalsize{
Climate change, driven by the accumulated greenhouse gas emissions (GHG), is predicted to damage environment, degrade the quality of natural resource, and decline the agriculture output in Indonesia. The huge contribution of GHG emission in Indonesia is mainly coming from forestry and industrial sector. Current emission from industrial sector is smaller in comparison to that of forestry sector, however it is growing rapidly and predicted to overtake the emission from forestry sector in 2025.    







The plan for climate change mitigation has been mainstreamed and included within national plan. In 2007, Indonesia has established National Action Plan on Climate Change.  The government of Indonesia has also created National Board of Climate Change in 2008 to coordinate the climate change mitigation policies at national level. One of the mitigation policies is the application of carbon tax under the responsibility of Ministry of Finance (MoF), which will be levied on carbon emitting industries in 2014 onward.  







However, the success of carbon tax implementation is potentially hampered by several problems. The first problem is concerning the conflicting objective between government and industry, since tax implementation is increasing the cost for profit"=maximising industry. There is also the problem of asymmetric information. Monitoring is costly to government, leading to tendency of industry to take non"=compliance action. Furthermore, corruption in directorate of taxation may hamper further the tax compliance.  In order to align its objective with the compliance of industry, government as the regulator should set the optimal carbon tax scheme that minimises the social cost relating to carbon tax implementation while taking into consideration the presence of corruption.  







This study is intended to provide theoretical and experimental support for optimal carbon tax scheme in Indonesia. First this study develops principal agent model that incorporate corruption in taxation problem to find the optimal carbon tax schemes.  Then the result of the theoretical model is compared with the empirical outcome of laboratory experiment.



}

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\noindent \textbf{Keywords:} Carbon tax, climate change, compliance, corruption , environment
\index[key]{Carbon tax}
\index[key]{Climate change}
\index[key]{Compliance}
\index[key]{Corruption }
\index[key]{Environment}
\end{document}