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June
2008
Health Ministry Leaning
Toward Cigarette Tax Hike
The Health Ministry is considering requesting higher taxes on tobacco
products to achieve the dual benefits of fewer smokers and increased tax
revenue. Currently, there are tobacco-related taxes of about 8.7 yen on
each cigarette. Overall tobacco tax revenue for the central and regional
governments combined comes to roughly 2.2 trillion yen a year. A typical
pack of cigarettes costs about 300 yen in Japan, less than a quarter of
the price in the U.K. and less than half of the price in France. The
Health Ministry believes that raising the price will be an effective way
to decrease the number of smokers and thereby reducing the harmful health
effects associated with the practice. It also sees a much needed source of
revenue for some government programs, such as the increase in the state's
share of funding the basic national pension system. The ministry is
expected to seek a tobacco tax hike as part of the tax revisions for
fiscal 2009. (The Nikkei; Saturday, June 28, 2008)
Fukuda Softens Stance On
Urgency Of Sales Tax Hike
Plans to raise the consumption tax should be considered over the next two
to three years, Prime Minister Yasuo Fukuda said Monday, backtracking from
statements last week that suggested the need to make a decision soon. In a
news conference last Tuesday, Fukuda touched on the sales tax issue,
saying that "the path is narrowing in light of our increasingly aging
population." This was interpreted to mean that the government would
consider increasing rates in fiscal 2009 tax reforms. But on Monday, the
prime minister stressed the importance of spending cuts and integrating a
special road fund into the general budget. "As part of budget
reforms, we're working to eliminate wasteful spending," Fukuda said.
He added that he will first focus on freeing up road construction funds to
secure funding for government programs. At the news conference marking the
end of the Diet session, Fukuda also promised to address issues concerning
the graying population and the declining birthrate, along with health
insurance and the growing ranks of nonfull-time workers, in a new
initiative to be unveiled in July. The government will tackle such issues
as a lack of obstetricians and pediatricians, as well as improving working
conditions for nonfull-time workers, Fukuda said. As for growing
speculation about cabinet reshuffling, the prime minister said he has no
plans to revamp his cabinet after the Group of Eight summit in Hokkaido in
July, as some ruling party members have suggested. Fukuda also ruled out
an early dissolution of the lower house. "We have a host of issues
that demand immediate attention. So I'm asking myself if now is the right
time to dissolve the Diet," he said. (The Nikkei; Tuesday, June 24,
2008)
May
2008
Japan To Offer Low-Interest
Foreign Aid To Cut CO2 Emissions
To support efforts by developing nations to combat global warming, the
government plans to set up a new lending program under which yen loans are
offered at about half the rates of conventional aid loans given to
developing nations. Through these loans, Japan intends to offer up to 500
billion yen over the next five years to nations that actively take steps
to reduce CO2 emissions. The plan is to be announced at the Group of Eight
summit in July. The new yen loans for combating climate change are to have
annual interest rates of 0.4% to 0.5%. In comparison, typical 40-year yen
loans have rates of 1% to 1.2%, depending on the country that is
borrowing. The loans are to be provided for alternative energy projects,
such as wind and solar power generation, as well as for the installation
of energy-saving equipment at power plants and forestation projects.
Reservoir construction will also be covered. Japan and Indonesia have
started to discuss projects and loan amounts for the first offering. Japan
has invited Indonesia to the G-8 summit to be held in Hokkaido, and it
hopes to reach an agreement on providing loans when the heads of the two
nations meet in July. Some 20-30 billion yen is expected to be loaned for
various projects, including the building of geothermal power plants and
efforts to improve the energy efficiency of fossil-fuel-burning plants.
The Japanese government hopes to extend the loans to others through talks
with African, Asian, Middle Eastern and South American nations. It
believes that there is strong potential demand for such projects. At
present, Nigeria and the South American nation of Guyana are among
candidates to receive the loans. The yen loans are the first step of the
"Cool Earth Partnership," a new effort to combat global warming
on a scale of 10 billion dollars. At the World Economic Forum in Davos,
Switzerland, this past January, Prime Minister Yasuo Fukuda said that
Japan would establish the program. Countries that emit large amounts of
greenhouse gas, such as Japan, the U.S., Europe, China and India, are
battling with each other to take the initiative in creating a new
international framework to succeed the Kyoto Protocol, which expires in
2012. Japan hopes to win support for its plan from nations receiving the
yen loans. (The Nikkei; Thursday, May 15, 2008)
Govt Mulls Plan To Display
CO2 Emissions From Farmed Produce
An Agriculture Ministry panel plans to begin discussions this month toward
setting up a system for displaying at retail stores the carbon dioxide
emissions that result from the growing and distribution of produce. The
panel is expected to look into how CO2 emissions should be measured and
displayed. The CO2 emissions in question will likely arise mainly from
greenhouses and agricultural equipment. By identifying hurdles as early as
this summer, the ministry hopes to kick off study and test programs,
targeting a limited number of farmers, agricultural corporations and
areas. The ministry does not intend to make the CO2 emissions program
mandatory. It rather wants to provide it as information to help consumers
select agricultural products at supermarkets and other stores. (The
Nikkei; Wednesday, May 14, 2008)
Govt Mulls Keeping Gasoline
Surcharge To Fund Green Measures
The government tax panel will discuss maintaining the gasoline surcharge
to provide funding for wind power development and other energy-saving
programs, as well as to serve as a form of carbon levy designed to
discourage gasoline consumption. A bill to allow gasoline tax proceeds to
be used for road construction for 10 years from the current fiscal year --
a move rejected Monday by the opposition-controlled upper house -- is
expected to be approved by the Diet on Tuesday when the
ruling-coalition-dominated lower house holds a second vote. But Prime
Minister Yasuo Fukuda has promised that the government will put together
legislation by the end of the year to free up the funds for general
purposes from fiscal 2009. In line with Fukuda's pledge, prior to the
lower house vote, the cabinet will approve plans to curtail the 10-year
timeframe to one year, allowing all gasoline and other road-related moneys
to be included in general revenue starting in fiscal 2009. The
government's Tax Commission is slated to hold its first meeting of the
year, possibly by month's end, to discuss how the gasoline tax revenue
should be used. The panel hopes to keep the provisionally high tax rates
on gasoline because of Japan's difficult fiscal situation and the global
trend of bolstering environment-related levies by taxing fossil fuels that
emit carbon dioxide, such as gasoline and coal. The panel is concerned
that should Japan effectively lower the gasoline tax, this could be
interpreted as tacit support for increased gasoline consumption. The
commission will likely call for the current gasoline surcharge to be
maintained to prevent a sharp reduction in tax revenue in line with
Fukuda's comment that it would be prudent to maintain the current level.
(The Nikkei; Tuesday, May 13, 2008)
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