National, local car taxes may be merged

Internal affairs minister Kazuhiro Haraguchi said Friday his ministry is studying a plan to unify national and local vehicle taxes into an environment tax around April 2011.

The minister of internal affairs and communications also said that a local environment tax to be levied based on the amount of carbon contained in gasoline and diesel oil also will be discussed with the Tax Commission.

The carbon tax was proposed by the National Governors' Association.

"Local governments also should take the initiative to fight global warming by creating taxes on activities that cause a strain on the environment," the minister said.

Haraguchi's plan is in line with the ruling Democratic Party of Japan's policy, which stresses the need to simplify the tax system related to cars and other vehicles and unify the two motor vehicle-related taxes, one of which is based on weight, with a view to reducing greenhouse gas emissions and preventing car accidents and noise pollution.

The DPJ also wants the revenue from the unified tax to fund the general-account budgets of local-level authorities.

The income from the local vehicle tax is estimated at ¥1.68 trillion for fiscal 2008, which ended last March. One-third of the income from the vehicle tonnage tax, which is projected to total ¥1.08 trillion, will go to municipal governments.