Wrong Time, Wrong Direction For Gas Tax Cut In Japan

2025-08-04 07:01:36

(MENAFN- Asia Times) Japan stands at a critical crossroads in its climate policy. While the world accelerates toward electric vehicle (EV) adoption to combat the climate crisis, seven opposition parties-including the Constitutional Democratic Party, Japan Innovation Party, and Democratic Party for the People-have submitted a bill to abolish the provisional gasoline tax rate.

If enacted, this legislation would not only reverse Japan's climate progress but also cast doubt on the nation's commitment to the Paris Agreement.

The proposed abolition represents a fundamental misunderstanding of what Japan needs to achieve its climate goals. Instead of reducing taxes on fossil fuels, Japan should be gradually strengthening its gasoline tax and using the revenue to accelerate the transition to EVs. This approach represents the only realistic path toward a decarbonized society.

Japan currently imposes a tax of 53.8 yen (36 US cents) per liter on gasoline (including the volatile oil tax), but this level remains merely moderate among OECD countries and falls far short of European nations that have implemented comprehensive carbon pricing policies.

To accelerate decarbonization, Japan should gradually increase its gasoline tax to 80 yen per liter and strategically invest the revenue in renewable energy and EV infrastructure.

With Japan's annual gasoline consumption estimated at approximately 44.6 billion liters, a 26.2 yen increase would theoretically generate about 1.17 trillion yen ($7.9 billion) in additional revenue annually.

Even accounting for reduced demand, this could yield 800-900 billion yen in new funding for climate initiatives. This revenue should be redistributed across four key areas:

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