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Saturday, May 10, 2008

For the moment, panel turns aside road tax bill

Staff writer

An Upper House panel rejected a contentious bill Friday to use road-related tax revenue exclusively to pay for road construction for the next 10 years — even though it will likely be rammed through the Diet by the ruling coalition next week.

The Democratic Party of Japan-led opposition camp voted down the bill, arguing that it contradicts Prime Minister Yasuo Fukuda's promise to free up the road-related taxes for general use beginning in fiscal 2009.

The full opposition-controlled Upper House is expected to vote down the bill early next week. However, the Liberal Democratic Party-New Komeito ruling coalition is then expected to use its two-thirds majority in the Lower House to ram the bill through the Diet.

Article 59 of the Constitution stipulates that a bill rejected by the House of Councilors can be approved by a two-thirds vote in the lower chamber.

The bill and Fukuda's proposal "are completely inconsistent," DPJ lawmaker Yoriko Madoka told the Upper House committee meeting. "If (Fukuda and the ruling bloc) intend to free up (the road-related tax revenue in the next fiscal year), why don't you just scrap (the bill)?"

Fukuda, on the other hand, argued that his proposal starts from fiscal 2009 and the bill is necessary to secure the road construction budgets of local governments for the current fiscal year.

"You say scrap the bill, but it's not that easy," Fukuda said. Scrapping the bill "would just cause confusion. We would have to change the budget (for fiscal 2008), wouldn't we?"

Fukuda's Cabinet is set to officially endorse the plan Tuesday to enable revenue from road-related taxes to be used for general purposes starting in fiscal 2009.

Gasoline tax rates and the road construction budget have been key issues in the current session of the divided Diet.

Although considered provisional, the added higher levy on gasoline and other auto-related taxes have been in place virtually without interruption since the 1970s. The revenue has been used only to fund road construction.

By refusing to vote on the bill in the Upper House to extend the tax rates, the opposition camp allowed them to expire on March 31, thus temporarily bringing down gasoline prices by about ¥25 per liter. Just one month later, the ruling bloc was able to override the upper chamber with a second vote in the Lower House that extended the special rates for another 10 years.

While stressing that the abolition of the extra tax rates would take a ¥2.6 trillion bite out of the state coffers, Fukuda relented at the end of March and said he would allow the revenue from those taxes to be freed up for other purposes beginning in fiscal 2009.

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The Japan Times

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