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Japan: Political Tension Over Gas
[Analysis] At issue is whether to extend the temporary higher rate for the gasoline tax
Hisane Masaki (hmasaki)     Print Article 
Published 2008-01-27 03:55 (KST)   
Political tension is heating up in Japan over whether to extend the temporary higher rate for the gasoline tax, amid spikes in oil prices and growing concerns about global warming.

Prime Minister Yasuo Fukuda's Liberal Democratic Party-led ruling coalition wants to retain the temporary higher rate, for fear of losing tax revenues needed for road-related projects, especially in rural areas, amid dire fiscal straits. Meanwhile, the biggest opposition Democratic Party of Japan demands the abolition of the temporary rate at a time when soaring prices for gasoline and other fuels are hitting consumers.

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As of Jan. 21, the retail price for regular gasoline averaged 153.3 Japanese yen (US$1.4) per liter across the country, according to the Oil Information Center, affiliated with the government-backed Institute of Energy Economics, Japan. While an expiration of the temporary higher gasoline tax rate could lead to a decline of 25 yen in the gasoline price per liter, the amount of tax revenues lost would also be huge.

Although they are described as "temporary," the higher rate for the gasoline tax has been in place for more than three decades. Lowering the temporarily increased rates for gasoline and other road-related taxes is expected to reduce tax revenues by a total of about 2.6 trillion yen -- 1.7 trillion yen for the central government and 900 billion yen for local governments, according to the official figures.

While expressing concerns about a possible sudden revenue shortfall, the government also argues that Japan will suffer diplomatically by sending a wrong message to the international community about its commitment to fighting global warming if the higher gasoline tax rate is scrapped, especially at a time when the nation is preparing to host this year's summit of the Group of Eight major countries.

Top leaders from the G-8 countries -- the United States, Canada, Britain, Germany, France, Italy, Russia and Japan -- are to get together in the Lake Toya resort in the northernmost prefecture of Hokkaido in early July. Climate change is expected to top the summit agenda. Japan also plans to invite leaders from such emerging economic powers as China and India.

The government estimates that if the temporary higher rates for both the gasoline and light oil delivery taxes are scrapped, use of automobiles will increase, resulting in a rise in carbon dioxide (CO2) emissions of 24 million tons a year, or about 1.9 percent of the nation's annual emissions, Japan's Jiji Press news agency reported on Jan. 18.

The gasoline tax has emerged as the biggest issue in the ordinary parliamentary session that convened last Friday, as the temporary hikes in gasoline and other road-related tax rates are to expire at the end of March. The DPJ-led opposition camp controls the Upper House of the bicameral Parliament, or the Diet, although the coalition led by the LDP holds a two-thirds majority in the more powerful lower house.

With a formidable opposition force, declining poll ratings and a possible general election for the Lower House this year, Fukuda, who concurrently serves as LDP president, has consistently faced the daunting challenge of pushing through his agenda since taking office last September, succeeding Shinzo Abe.

The ruling LDP-New Komeito coalition lost control of the 242-seat House of Councilors, or the Upper House, to the DPJ-led opposition in an election last July. To be sure, the ruling camp retains more than two-thirds of 480 seats in the House of Representatives, or the Lower House, whose decisions constitutionally take precedence over those of the Upper House regarding budget and treaties as well as the election of a prime minister. But it has faced significant difficulties in pushing through its legislative agendas since it lost its majority in the Upper House.
Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy. This is the first part of an article that originally appeared on Asia Times on Jan. 25.
©2008 OhmyNews
Other articles by reporter Hisane Masaki

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