Who Pays for Environmental Damage? Tax Justice and Environmental Restoration Obligations in Indonesia's Mining Sector

Abstract

Mining activities generate substantial fiscal revenues while potentially imposing long-term environmental costs on ecosystems and local communities. The effectiveness of Indonesia's fiscal and environmental governance therefore depends partly on whether mining companies bear an appropriate share of the costs associated with environmental degradation and restoration. This article examines environmental fiscal justice in Indonesia's mining sector. Using normative juridical research and policy analysis, the study evaluates taxation, non-tax state revenue, environmental obligations, reclamation requirements, and financial guarantees for mine closure. The article argues that a tax system cannot be considered just when public revenue is collected from resource extraction while substantial environmental liabilities are transferred to governments and future generations. The study proposes an integrated environmental fiscal framework combining taxation, environmental levies, reclamation guarantees, and transparent restoration funds. The framework should ensure that fiscal instruments complement rather than substitute for direct environmental obligations. Particular attention is given to the principles of polluter pays, intergenerational equity, and transparency in environmental financial management. The article concludes that Indonesia's mining fiscal regime should more explicitly incorporate environmental costs into the economic structure of resource extraction. Such reforms would strengthen accountability while ensuring that natural-resource development does not create disproportionate environmental burdens for resource-producing communities.