Impact of Carbon Tax and Financial Performance on Business Sustainability Transport Firms

Abstract

Climate change has become a major global issue affecting environmental sustainability, economic stability, and business activities across various sectors, including transportation. The transportation sector is recognized as one of the largest contributors to carbon emissions due to its heavy reliance on fossil fuels. In response to environmental challenges, the Indonesian government implemented a carbon tax policy in 2022 as part of its sustainable fiscal reform agenda. The implementation of carbon tax is expected to encourage companies to reduce emissions and improve operational efficiency; however, it may also increase operational costs and affect corporate financial performance and sustainability.This study aims to analyze the effect of carbon tax and financial performance on the business continuity of transportation companies in Indonesia during the period 2022–2024. The background problem of this study is the limited empirical evidence regarding how environmental fiscal policies influence corporate sustainability, particularly in Indonesia’s transportation sector. The novelty of this study lies in its integration of carbon tax policy, financial performance, and business continuity within a single empirical framework focusing on transportation companies in Indonesia.This study employs a quantitative research approach using secondary data obtained from annual financial reports of transportation companies listed on the Indonesia Stock Exchange (IDX) during 2022–2024. Financial performance is measured using Return on Equity (ROE), Current Ratio (CR), and Debt to Equity Ratio (DER). The collected data are analyzed using multiple regression analysis to examine the relationship between carbon tax and financial performance variables on business continuity.The findings indicate that financial performance significantly influences business continuity. Companies with strong profitability and liquidity tend to demonstrate better operational sustainability and adaptability to environmental regulations. Meanwhile, carbon tax policy creates additional operational pressures that may affect companies with weak financial conditions. The study concludes that transportation companies need to improve financial resilience and operational efficiency to maintain long-term sustainability under environmental regulatory pressures. The results of this study are expected to provide practical implications for policymakers and business practitioners in developing adaptive and sustainable business strategies.