December 12, 2011
JAMA and JADA Comment on Japan's Fiscal 2012 Tax Reform Outline
Toshiyuki Shiga, Chairman, Japan Automobile Manufacturers Association
Yoichi Amano, Chairman, Japan Automobile Dealers Association
In recent years JAMA and JADA have joined forces to strongly solicit the abolition by the Japanese government of the automobile acquisition and tonnage taxes, which long ago lost any justification as viable taxation measures. Our two organizations adopted this position from the standpoint of ensuring fairness in Japan’s tax system, preventing the hollowing out of the domestic auto industry, and maintaining employment.
JAMA and JADA are therefore pleased that the government’s tax reform proposals, framed within the context of countering the yen’s sharp appreciation and the aforementioned industrial hollowing out, include modest reductions in the automobile tonnage tax as well as a three-year extension of tax breaks on eco-friendly (i.e., fuel efficient) vehicles and the reintroduction of subsidies for their purchase. We wish to convey our gratitude to all the entities and individuals who have worked towards this outcome, on which basis we intend to promote a reinvigorated domestic auto market.
However, we must also express our regret that the measures concerning the auto acquisition and tonnage taxes do not go far enough in addressing the hopes of Japan’s 75 million motor vehicle users, including the 4.3 million who signed a petition seeking their abolition.
The government should provide a cogent explanation of the rationale for upholding both these taxes, which were originally established as revenue sources for roads but currently are allocated to general revenue. It should also explain why automobile users, and particularly those in rural areas where there is little choice in terms of efficient mobility other than to own multiple vehicles, are being asked to shoulder such a heavy financial burden in order to compensate for the shortage in national tax revenue.
We understand that a proposal to increase Japan’s consumption tax will soon come under consideration. Within the scope of that debate, JAMA and JADA will continue to lodge vigorous appeals to the government for the elimination of both the automobile acquisition tax and the automobile tonnage tax.
