Japan’s Environment Ministry Now Calls for Carbon Tax by 2007
26 October 2005
Reuters. The Japanese Environment Ministry has again called for the introduction of a carbon tax, this time in January 2007, in an attempt to meet its targets for reducing CO2 emissions as set by the Kyoto protocol.
But it also recommended delaying the application of the tax on gasoline, diesel and jet fuel to avoid putting too much economic burden on end-users.
Originally announced in November 2004, the proposed carbon tax drew so much immediate fire from trade groups and other ministries in the government that the Environment Ministry backed off its planned implementation in favor of “further discussion.” (Earlier post.)
The most recent statement on the tax issued by the ministry said that the tax should be ¥2,400 (US$20.75) per ton of carbon emitted from fuels. That works out to about ¥1.52 (US$0.043) per liter of gasoline, or ¥5.75 (US$0.163) per gallon.
The tax would generate income of ¥37 billion (US$320 million) a year for the government and result in a payment of ¥2,100 (US$18.15) per year for an average household. (As a side note, although the tax rate remains the same in this statement at ¥2,400 per ton, the Ministry reduced its calculation of the average household burden to the ¥2,100 figure.)
Strong opposition has come from the Petroleum Association of Japan (PAJ), the country’s largest oil industry group, which argues that the proposed tax would further curtail demand for oil products in the world’s third-largest oil user, as consumers are already paying tax equivalent to about 50% of the price of gasoline at the pump.
The ministry last year assessed that the proposed tax would cut gross domestic product (GDP) growth by 0.01 percentage point when fully introduced. It did not provide specific figures for a possible reduction in Japan’s energy demand.
A ministry official did not specify how long it would delay the new taxation on gasoline, diesel and jet fuel.
A report earlier in October showed that Japan’s CO2 emissions declined 0.8% in fiscal year 2005 to 1.329 billion tonnes from the previous year. However, the emission volume was 7.4% higher than that in 1990. Under the Kyoto Protocol, Japan must reduce its CO2 emissions by 6% from the 1990 level by 2008-2012.
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