Fiscal Instruments to Support the Environmental Friendly Product Development in Indonesia: Hybrid Vehicle

This study was aimed to elaborate fiscal instrument to support the development of the hybrid car in Indonesia. It focuses on three kinds of fiscal instruments available: the Luxury Goods Tax reduction, Customs Duty reduction/exemptions, VAT reduction (or tax borne by the Indonesian government). The study was consisting of impact analysis on oil consumption and CO2 emission; economic impact analysis by employing Input and Output Table Analysis; and Cost and Benefit Analysis. The result of this study indicated that provision of several scenarios on fiscal policy on the hybrid vehicles, to both automotive trade and industry, is economically feasible.