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Japanese Car Makers Look For Lower Car Taxes

by Mary Swire, Tax-News.com, Hong Kong

08 November 2011


The Japan Automobile Manufacturers Association organized a press conference recently, together with automobile manufacturers, trade unions and dealer representatives, to request the government to come to the industry’s aid by reducing car taxation in the country.

In the presence of top executives from Toyota, Nissan and Honda, it was pointed out that auto manufacturers, after the slowdown in production and spare parts caused by the tsunami and earthquake in northeast Japan and by the floods in Thailand, are now being greatly affected by the maintained current rise in the value of the Japanese yen.

It was predicted that the rise in the yen could cause car production in the country to show a sharp fall. It was said that for each fall in the US dollar of one yen, the Japanese car industry loses a further JPY80bn (USD1bn).

In the press conference, the industry requested that, if the government was unable to reduce the strength of the yen in the current exchange rate markets, it should, instead, reduce and simplify Japan’s car taxes, which were said to be up to triple those levied in Europe and 49 times those in the United States.

A car purchaser in Japan needs to pay an acquisition tax of 5% of the value of the car. In addition, with the bi-annual compulsory safety inspection, there is a weight tax, while an annual tax is also payable. The level of both of the latter taxes is dependent on engine size. It was said that, over a ten-year period, a car owner pays more in those taxes than on the original cost of the vehicle.

The car industry is also asking for confirmation that the present tax breaks on green hybrid and electric car purchases will be maintained, and will not expire in March next year as expected under current legislation.

It was reported that annual new car sales in Japan have fallen from around 8m in 1990 to a little over 4m expected this year, but that a reduction in the tax burden could increase that figure to over 5m in 2012.

TAGS: tax | economics | sales tax | vehicle tax | manufacturing | tax breaks | currency | Japan

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