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Thursday, Jan. 24, 2008

Bill to keep high gas tax reaches Diet

Ruling bloc warns DPJ of another override


Staff writer

The government submitted a tax reform bill to the Diet Wednesday that includes a clause to continue the special additional higher gasoline and other auto-related taxes — a key bone of contention that the opposition camp plans to confront the ruling bloc over in the current session.

The Democratic Party of Japan, the main opposition force, has said it intends to submit a bill to abolish the provisional tax rates to lower the price of gasoline amid soaring oil prices.

Finance Minister Fukushiro Nukaga issued a statement Wednesday stressing the importance of the bill's passage before the end of fiscal 2007 in March. "This is a bill that directly affects the lives of the public," he said. "If the bill is not approved before the end of the fiscal year, it would greatly affect not only revenues but also the lives of the people and economic activity."

The bill to revise the Special Tax Measures Law, which sets special additional gasoline and other auto-related taxes, stipulates that the special rates be maintained for another 10 years after they expire in March.

The extra rates on gasoline and motor vehicle tonnage were originally adopted in the 1970s as a temporary measure to finance road construction and maintenance but have been retained ever since.

The government usually submits a tax reform bill to the Diet in early February but it moved forward the timing this year to secure enough time for deliberation in a divided Diet. The ruling bloc can override a rejection by the opposition-controlled Upper House with a two-thirds vote in the Lower House.

The Liberal Democratic Party-New Komeito ruling bloc aims to pass the tax reform bill in the Lower House in mid-February. Even if the Upper House rejects it, the coalition is ready to use the overriding two-thirds vote in the lower chamber.

Prime Minister Yasuo Fukuda admitted the two-thirds vote was a rarely used measure but told an Upper House plenary session Tuesday that "it is approved by the Constitution as a decision-making measure to draw a conclusion after thorough discussion."

The two-thirds vote was used for the first time in half a century earlier this month to ram a special antiterrorism law through the Diet. The bill also includes new tax breaks for small and medium-size firms and grants tax incentives for research and development programs at private firms.



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