Japan may tax fossil fuel use

Japan is considering taxing consumers of fossil fuels, including petroleum and coal, in their latest plans to meet their targets to reduce greenhouse gas emissions. To ensure that Japanese business does not suffer, steel makers and other businesses using coal and oil as fuel would be given tax waivers or receive lower rates.

The environment ministry expects tax revenues of roughly 600 billion yen (US$5.4 billion) a year. With approximately 45 million households in Japan, this will cost each household roughly $120 per year.

Specific tax amounts will be determined according to carbon dioxide emission volume and added to gasoline prices, electricity fees, and the like. Under the ministry’s draft proposal, a tax of slightly more than 1 yen (US$0.009) would be imposed for each liter of gasoline. The revenues would be used to finance energy-saving policies.

The ministry will present this proposal to the Liberal Democratic Partys environmental research council Thursday. The ministry hopes to incorporate their proposal into fiscal 2005 tax reform. (Asia Pulse/Nikkei, Aug. 3).