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Japan Uses Tax Structure to Influence Fuel Efficiency (JUNE 1999)

Item #d99jun41

According to a story in the Feb. 17, 1999, edition of the Daily Yomiuri, the Japanese Council for Transport Policy plans to revise the automobile-related tax system to lower taxes on fuel-efficient cars, thus promoting the purchase and use of fuel-efficient automobiles. The object is to lower emissions of greenhouse gases, chiefly carbon dioxide. The taxation standard is currently based on engine displacement; it would be changed to a standard based on fuel efficiency. Austria, Denmark, Germany, and France are also considering similar measures. The Japanese initiative is considering four forms of taxation: a tax assessed on vehicle weight, a vehicle-acquisition tax, a local tax, and a small-automobile tax. The revenues from each of these types of taxes are currently designated for specific expenditures, and this linkage is complicating discussions of reforming the tax structure. The effects of the current recession in Japan are also affecting deliberations about any new taxes.