Friday, October 18, 2013
Ministry Proposes Tax Benefits For Fuel-Efficient Vehicles
TOKYO (Nikkei)--The automobile acquisition tax would be cut next fiscal year for environmentally friendly vehicles under an Internal Affairs Ministry proposal to help take the sting out of the upcoming sales tax hike.
The plan would reduce the acquisition tax -- levied by local governments -- by applying a set deduction to the purchase price on vehicles that meet the fuel efficiency standards of fiscal 2010. With limited exceptions, notably foreign luxury vehicles, car buyers will see a lighter tax burden. If the price is below a certain level, no acquisition tax will be applied.
The ruling parties' tax panel in January decided to lower the acquisition tax when the consumption tax goes to 8% and abolish it altogether when it rises to 10%.
Automakers and the Ministry of Economy, Trade and Industry have requested a blanket cut in the acquisition tax from 5% to 3%. But this idea was skipped because that would lower taxes on high-priced gas guzzlers more, says a source close to the matter.
In addition, to offset the decline in local revenue and promote green vehicles, the ministry proposes to incorporate fuel economy in the annual vehicle ownership tax when the consumption tax rises to 10%. This would likely increase the ownership tax on minicars as well as luxury and commercial vehicles, but lower it for fuel-efficient vehicles.
(The Nikkei, Oct. 18 morning edition)