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Japan to skip carbon tax in FY 2022 reform package

  • December 9, 2021
  • , Jiji Press , 6:46 p.m.
  • English Press

Tokyo, Dec. 9 (Jiji Press)–Japan’s ruling Liberal Democratic Party and its coalition partner, Komeito, have decided not to include a carbon tax in their tax reform package for fiscal 2022, informed sources said Thursday.

Meanwhile, a draft of the package for the year from April listed for the first time a carbon tax, to be levied in accordance with the amount of greenhouse gas emissions, and various other policies aimed at realizing a carbon-free society as important issues that need to be  considered.

The government and ruling bloc are expected to make full-scale arrangements on the issues toward fiscal 2023 or later. But they are likely to have a lot to work on due to persistent opposition from business circles reluctant to bear greater burdens.

A carbon tax is a specific measure of a carbon-pricing system, which sets a price on greenhouse gas emissions as a countermeasure against global warming.

In the summer, the Environment Ministry called for the measure in its request for the fiscal 2022 tax system reform.

The draft reform package, drawn up on Thursday, said that the ruling parties will proceed with specialized and technical discussions on a policy mix, including a carbon-pricing system.

Business circles oppose shouldering greater burdens linked to greenhouse gas emissions due chiefly to the economic weakness amid the spread of the novel coronavirus and recent surges in energy prices.

Thus, the ruling camp was unable to mention a carbon tax or a carbon-pricing system directly in the tax reform draft.

One source linked to the government said, “Discussions can’t be launched on a specific system until the coronavirus and energy price issues have calmed down.”

As a carbon-pricing mechanism, the European Union and China have already introduced an emissions trading system under which participating companies can purchase emission quotas from companies that have cut more emissions than required.

The administration of U.S. President Joe Biden is considering introducing a carbon tax.

Japan may be left behind the global rend by postponing its response to the matter.

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