Japan to Suspend Vehicle Environmental Performance Tax for 2 Yrs

Tokyo, Dec. 16 (Jiji Press)--Japan's government and ruling coalition plan to suspend the tax levied on automobiles in accordance with their fuel efficiency for two years from fiscal 2026, it was learned Tuesday.

The government and the coalition of the ruling Liberal Democratic Party and the Japan Innovation Party (Nippon Ishin no Kai) aim to promote vehicle sales through the freeze of the environmental performance tax at a time when the domestic automobile industry is concerned about the impact of the high tariff policy of U.S. President Donald Trump's administration.

A resultant annual local tax revenue drop of an estimated 190 billion yen will be covered fully with state funds.

Whether to lift the freeze in fiscal 2028 will be decided in the fiscal 2027 tax system reform discussions.

The levy was introduced to encourage the purchase of vehicles with smaller environmental burdens, with the tax rates set at zero to 3 pct of the vehicle prices according to their fuel efficiency.

[Copyright The Jiji Press, Ltd.]