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Tuesday, May 8, 2012

Steep rise in expressway tolls likely as funds run out ahead of schedule

Jiji

Expressway tolls are expected to rise sharply nationwide starting in fiscal 2014, as money set aside for discounts is likely to run out.

News photo
Taking its toll: The New Tomei Expressway (above), as seen last month, runs parallel to the Tomei Expressway in Gotemba, Shizuoka Prefecture. KYODO

A number of rate reductions — including a 50 percent cut on holidays and a 30 percent cut on weekdays during the daytime — were introduced in 2008 as part of a program by the Liberal Democratic Party and New Komeito coalition government to promote the use of expressways.

Under the program, the government took over ¥3 trillion worth of construction debt held by expressway operators, allowing them to slash tolls.

The program was initially expected to last a decade, ending in March 2018. However, due to larger-than-expected rate cuts and the use of funds for reconstruction work in the quake- and tsunami-hit Tohoku region, its funding is now expected to run out at the end of March 2014.

Ending the 50 percent discount, warned one senior transport ministry official, would effectively be the same as doubling tolls for drivers. An increase of such a magnitude, the official added, would make commuters' lives "unsustainable" — especially as a hike in the consumption tax to 8 percent from the current 5 percent may also be introduced in fiscal 2014.

The transport ministry is examining the future of the discount toll system after fiscal 2014, with deliberations focused on a possible extension of construction debt repayments.

While loans used for construction of expressways are scheduled to be repaid by fiscal 2050, extending the deadline for the loans would mean lower annual repayments, making it possible to use the money saved to continue the toll discount program.

However, because the repayment period is legally fixed to prevent construction of unnecessary roads through unconstrained lending, a legal revision could prevent an extension.

The government may also cover more of the debt. But since this option adds to its own debt, a senior Finance Ministry official described this scenario as "absolutely impossible," adding that taxpayers would never accept it at a time when the government is planning to raise the consumption tax.

Toll discounts have recently been a key plank in helping parties win votes. The 2008 program introduced by the LDP and New Komeito was said to be an attempt to counter the Democratic Party of Japan's proposal to make free expressways one of its key pledges ahead of the 2009 Lower House election.

Nevertheless, toll discounts are undeniably benefiting people, said another top transport ministry official, especially in rural areas, where there is more reliance on automobiles than in cities.



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