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Wednesday, Feb. 20, 2008

Diet begins debate on keeping extra gas taxes

Staff writer

Debate over whether to keep for another 10 years the long-standing but provisional extra gas and other auto-related taxes began Tuesday as the Lower House took up the government's tax reform bill.

The extra rates, which Prime Minister Yasuo Fukuda is determined to maintain, are due to expire at the end of March.

The Democratic Party of Japan, the largest opposition force, calls the special taxes "unreasonable" and wants them abolished, which would lower gasoline prices. Lower gas prices could stimulate economic activity in a country whose auto industry has been struggling to sell cars.

Desperate to maintain the extra taxes on gasoline and motor vehicle tonnage, which were introduced on a provisional basis in the 1970s, Fukuda and his ruling Liberal Democratic Party-New Komeito coalition hope to get the bill through the Lower House next week along with the fiscal 2008 budget.

"From the viewpoint of revitalizing and (supporting) the independence of local areas and the lives of the public, our country's roads still have many problems," Fukuda said during the Lower House plenary session. The government "asks the public to continue bearing the same financial burden as before."

Although the fiscal 2008 budget will come into effect automatically 30 days after being handed over to the House of Councilors, the tax reform bill must be approved by that chamber by the end of March if the coalition is to keep the extra rates when the new fiscal year starts April 1.

Failing that, the coalition plans to use its two-thirds majority in the more powerful Lower House to carry the extra taxes by a second vote in that chamber.

The ruling bloc argues termination of the extra rates at the end of March could lead to "confusion" among the public.

Last month, Lower House Speaker Yohei Kono mediated an agreement between the coalition and the opposition camp to seek "a conclusion" on the tax bill by the end of March.

While Fukuda and the ruling bloc interpret this as an agreement that the Upper House will vote on the tax reform bill by March 31, the vague term has left room for some DPJ lawmakers to argue they did not promise to vote on the bill.

Revenue from the gasoline and the other auto-related taxes are used exclusively to finance road construction. The government's plan to invest up to ¥59 trillion in new road construction in the next decade depends on continuation of the extra rates.

Fukuda has repeatedly stressed that the extra rates are still necessary to build and repair roads, secure adequate access to emergency hospitals and take measures against urban traffic jams.

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The Japan Times

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