Fukuda: Road tax rates will be revived

Prime Minister Yasuo Fukuda made it clear Saturday that higher gasoline and road-related tax rates, set to expire today, would be revived in spite of stiff opposition to such a move.

In an interview with reporters on Saturday, Fukuda said, "The current tax rates must be maintained."

He cited a revenue shortfall for local governments and a negative environmental impact if the additional taxes were abolished.

Fukuda has promised to turn road-specific taxes into general revenue from fiscal 2009.

But his statement Saturday indicated that the higher tax rates--which are called provisional but have been in place for decades--will not be lowered even in or after fiscal 2009.

The coalition of his Liberal Democratic Party and New Komeito failed to gain passage in the opposition-controlled Upper House of a bill that would maintain the higher tax rates beyond today.

Gasoline prices are expected to fall by about 25 yen per liter from Tuesday.

Fukuda declined to say if the government would force a bill to revive the higher tax rates through the Diet by a second vote in the Lower House, which is dominated by the LDP and New Komeito.

He instead said that "there are things that should be done" before taking such a hard-line approach.

However, Cabinet Secretary Nobutaka Machimura, for the first time among government leaders, said Saturday that the government may resort to a second vote.

In a speech in Tokyo, he said the government wants the Upper House to either vote for or vote down the bill as soon as possible so that the government can raise the gasoline tax by 25 yen again.

Fukuda said the expiration of the higher tax rates will cause a revenue shortage of 2.6 trillion yen in each fiscal year, which is equivalent to a 1-percentage point portion of the consumption tax.

"It will stagnate local economies," said Fukuda, adding that the call from Minshuto (Democratic Party of Japan) for immediate removal of the additional taxes has "ignored the voices of rural regions."

Fukuda also said it would be irresponsible for Japan, which will host the Group of Eight summit meeting in Hokkaido in July, to lower the rates.

Saying that Japan's gasoline tax is not necessarily higher than those of Western countries, lowering the tax will be perceived as a "backward move" by countries that are trying to reduce greenhouse gas emissions, according to Fukuda.

"Are we allowed to encourage emissions of carbon dioxides by making gasoline cheaper?" he asked.

Fukuda said he is opposed to dissolving the Lower House for a snap election at a time when the economy is hitting a lull and concern is growing over the global economy.(IHT/Asahi: March 31,2008)