Japanese Environment Tax Plan Weak, Riddled W. Loopholes - Yomiuri

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"A plan put together by the Environment Ministry to adopt an environmental tax is ambiguous about what it aims to accomplish. This is because the ministry's plan has been devised so as not to have too adverse an effect on individual and corporate taxpayers, as well as local governments.

During their intensive discussions on a host of problems arising from global warming, some members of the government's Tax Commission insisted it was necessary to introduce the environmental tax. However, many members of the panel were critical of the specifics of the proposed tax. The pros and cons of the tax have not yet been fully debated. There are too many hurdles to be cleared to create an environmental tax for next fiscal year. The ministry's plan would tax consumption of oil, coal and other fuels at a rate of 2,400 yen per ton of carbon contained in such fuel. By imposing such taxes, the plan would seek to curtail carbon dioxide emissions in this country by 4 percent.

The ministry's plan means that 1.5 yen in taxes would be collected on every liter of gasoline. A single household would pay about 3,000 yen in new taxes annually. This would enable the government to gain about 490 billion yen in new tax revenues. A sizable portion of the money raised from the tax would be added to the government's general revenue stream. Of the total, about 70 billion yen would be allocated to local governments. The ministry's plan incorporates numerous measures to ease bitter opposition to the proposed tax from the industrial sector.

The tax rate set in the plan is much lower than the rate initially considered by the ministry. This means that the amount of revenues to be raised by the ministry's plan would be about half its initial estimate. It also is disturbing to note that the plan would allocate revenues from the proposed tax to general revenue, meaning that no restrictions would be imposed on the purposes for which such financial resources could be used. This is in contrast to the ministry's initial plan to allocate environmental tax revenues exclusively to finance anti-global warming programs. Under the ministry's plan, coal used to produce iron and steel, as well as fuel oil used in agriculture, forestry and fisheries, would be exempted from taxation. The tax rate for kerosene consumed by residents in cold districts would be half that for people living in other areas. To reduce the burden to be shouldered by low-income members of the population, residents who consume a small amount of electricity and gas would be granted exemption from the proposed tax."

EDIT

http://www.yomiuri.co.jp/newse/20041114wo81.htm