Players in the Debate on Carbon Taxes
Implications for future development
Ministry of Environment (MOE)
Back in the early 1990s, the Ministry of Environment has established
a research group on utilizing economic instrument (taxes and
charges) in environmental policies, and started examining
the feasibility of a carbon tax in Japan. However, the official
carbon tax proposal wasn’t put forward until well after the
Kyoto Protocol was adopted.
The carbon taxes proposed by the MOE are characterized by
low tax rates, and, unlike revenue-neutral carbon taxes introduced
in Europe, the carbon taxes proposed by the MOE are expected
to increase government revenues.
2008 environmental tax (carbon tax) proposal of the MOE
tax rates, increase revenues to combat climate change
of tax revenues
tax breaks for energy efficient buildings, low fuel consumption
automobiles, forest absorption sources, etc
to the existing energy taxes
of the existing energy taxes (e.g. Gasoline tax, light
oil delivery tax) with environmental taxes
of Economy, Trade and Industry (METI)
Although according to some media, the METI is wary of introducing
carbon taxes in Japan, it is not entirely impossible for METI
to reconstruct the existing energy taxes and replace some
of them (such as petroleum and coal taxes) with carbon taxes.
of Land Infrastructure, Transport, Tourism (MLIT)
Besides petroleum and coal taxes, automobile and aviation
taxes can also be reconstructed and replaced by carbon taxes
or environmental taxes.
As the road-related tax revenues get diverted, one option
is to maintain the automobile tax rates, and use part of the
revenues to combat climate change. But the MLIT argues that
it is unfair for automobile users to bear more tax burdens
than users of other kinds of petroleum products.
of Agriculture, Forestry and Fisheries (MAFF)
The MAFF is pushing for carbon taxes together with the Ministry
of Environment. The 2004 carbon tax proposal was collaboration
between the two ministries. In the 2006 carbon tax proposal,
the Ministry of Environment also specified that of the 360
billion tax revenues, 200 billion would be used for forestry
protection and maintenance.
The Ministry of Finance has the final say in the introduction
of carbon taxes. So far, the ministry hasn’t made clear what
its position is on the issue yet. Nonetheless, as the fiscal
deficit increases, it is very likely that the Ministry of
Finance would agree on introducing a new tax.
In many European countries that have already adopted carbon
taxes, tax revenues are also used to support social welfare.
In this view, the Ministry of Health, Labor and Welfare should
also join the discussion about the introduction of carbon
taxes. To achieve better coordination among ministries, the
cabinet office is also expected to play a part.
Federation (Japan Keidanren)
The Japan Business Federation (Keidanren) has opposed the
introduction of carbon taxes and questioned its price incentive
effect, announcement effect and its effects of increasing
tax revenues. It claimed that the carbon taxes would harm
industries and weaken the economy.
of Corporate Executives (Keizai Doyukai)
Unlike Keidanren, the Japan Association of Corporate Executives
acknowledged the announcement effect and the incentive effect
of carbon taxes. However, the Association insists that a change
in the existing tax system, including the existing energy
taxes, is necessary to implement any new taxes.
of Japan Keidanren and Keizai Doyukai on carbon taxes
Association of Corporate Executives
Action Plan (VAP) and public campaigns
||VAP and public
campaigns are effective, but whether the effectiveness
can be sustained and enhanced is not clear
effective, but a reform of the existing tax system should
come first; Oppose the proposal of the Ministry of Environment
||Hard to pass
on price burdens to consumers; the increased cost due
to carbon taxes would discourage development of additional
encourage consumers to buy eco products, companies to
switch to energy-efficient production; incentives for
have environmental awareness. Understanding and cooperation
of citizens are not gained through increasing tax burdens
but burden of taxes, but through effective public campaigns
the incentive to act more environmental friendly, such
as consuming less fossil fuels and electricity.
on revenue increase
the use of tax revenues. Should first consider how to
spend the existing revenues more efficiently
spend more efficiently the current budget for fighting
global warming. Not simply adding new taxes; should reduce
annual spending and improve efficiency
Democratic Party of Japan (DPJ)
According to its manifesto, DPJ will consider introducing
a global warming tax in Japan, but it hasn’t unveiled any
details on how the tax would be implemented.
DPJ also pledged to abolish both the provisional tax rates
of automobile-related taxes (i.e. gasoline taxes, light oil
delivery taxes, automobile weight taxes and automobile acquisition
taxes) and highway tolls to reduce living costs and activate
Although the abolishment of provisional tax rates and highway
tolls provides a good opportunity to introduce a global warming
tax, in the face of the financial crisis, it is important
to reduce the burdens of people while addressing climate change.
In recent years, in order to achieve the emissions reduction
targets under the Kyoto protocol, tax revenues have been spent
on purchasing overseas emissions credits. The abolishment
of highway tolls and provisional tax rates, together with
the increased spending on purchasing credits from overseas,
would further increase the burdens of taxpayers in Japan.
To successfully implement a global warming tax in Japan,
it is important to consider the tax system as a whole and
take a comprehensive approach to tax reforms.One solution
is to introduce a revenue-neutral global warming tax, whose
revenues can be used to reduce social welfare premium and
other taxes, so that the global warming tax doesn’t cause
additional tax burdens.
Implications for future development
Weakness of policymaking system
If each ministry is confined in their own interests and responsibilities,
it is hard for them to cross the boundaries and cooperate.
This is one of the reasons why the progression toward the
introduction of carbon taxes has been slow. Carbon taxes are
an interdisciplinary policy, and so far the government has
relied too much on ministries. To cross the boundaries and
realize inter-ministerial cooperation is exactly the responsibility
of political parties. The process of introducing carbon taxes
has indicated the weakness of Japan’s political system.
To realize a low-carbon society, it is necessary to introduce
carbon taxes in Japan as early as possible.
The current debate
has been focused on the effectiveness of the carbon taxes
proposed by the Ministry of Environment. More discussion on
the setting of tax rates and revenue-neutrality is necessary.
It is also necessary
for political parties to take on their responsibilities.
Carbon taxes are
important for environmental technology development, employment
expansion and the strengthening of economic power. Learning
from the experience of the current policy debate, it is urgent
for ministries, political parties, industries, and NGOs to
start cooperating and accelerate the progress of introducing
carbon taxes in Japan.
TO ABOUT CARBON TAXES|
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