Tax Justice in Indonesia's Palm Oil Industry: Fiscal Contributions, Environmental Externalities, and Regional Distribution

Abstract

Indonesia's palm oil industry generates substantial economic activity and fiscal revenue while simultaneously producing significant environmental and social externalities. This creates a complex tax justice question concerning whether the fiscal contribution of the industry adequately reflects the environmental costs associated with production and whether revenues are equitably distributed across producing regions. This article examines the tax governance of Indonesia's palm oil sector from a distributive and environmental justice perspective. Using normative juridical and policy analysis, the study evaluates taxation, export-related fiscal instruments, environmental obligations, and revenue distribution between national and regional governments. The article argues that tax policy should internalize environmental externalities while ensuring that producing communities receive adequate public benefits from natural-resource exploitation. The study proposes a palm oil tax justice framework combining polluter-pays principles, transparent fiscal transfers, environmental restoration funding, and community development obligations. Particular attention is given to the relationship between national fiscal revenues and the public services available in palm oil-producing regions. The article concludes that a fair palm oil fiscal regime should balance economic competitiveness with environmental responsibility and regional distributive justice.