Japan announced the extension of tax breaks for fuel-efficient vehicles by three more years, to April 2015.
The breaks were going to expire in April 2012, but the Japanese government decided to extend them in order to support automakers, affected by the strong yen and the slowing global demand.
In addition to the tax breaks extension, Japan will also resume for one year rebates for eco-friendly vehicles, which expired in September. Finance Minister Jun Azumi has said the nation needs to support the key industry of automobiles while finding ways to reduce revenue losses. Japan has the world’s largest public debt.
“The importance of the car industry is undeniable. We want to provide a complete backup for them,” Azumi was quoted as saying by Bloomberg. However, Prime Minister Yoshihiko Noda rejected requests for more reductions of levies on vehicles. The government will lower car weight taxes by only 150 billion yen ($1.9 billion), even though the Trade Ministry requested about 1 trillion yen of levy cuts.
“Our request isn’t only to reduce the tax burden, but it’s to combat the strong yen, prevent a hollowing out and maintain domestic production,” Toshiyuki Shiga, head of the Japan Automobile Manufacturers Association, said on November 15.