The Japanese Green Tax

  • Megumi Kashiwagi
  • Research Director
    Megumi Kashiwagi
  • [Expertise]
    Public Finance and Social Security

　 The Green Tax is designed to take external diseconomies into account. The Green Tax consists of economic disincentives and it was germinated instead of regulatory frameworks. Japanese Green tax tends to be an environment program tax aimed at environment protection. Under the decentralization and the shifting of tax revenues from the national to the regional level, Japanese local governments discuss strongly about new green tax within the local taxes. It is naturally very difficult to introduce a new tax, "Industrial waste tax" was only just able to be introduced. This was an exception. Most cases tacked on or deducted the new fee within existing tax system such as automobile tax and municipality tax. As a way to global warming, Japanese central government introduced to tacked "carbon dioxide emissions based tax rate fees" on "Petroleum and coal tax" under special taxation measures law since October 2012.

1. History of the Japanese Green Tax
　 Since the 1950s, Japan made a political issue out of pollution in order to pose health hazards to humans and addressed some environmental deal. In 1983 the Pollution-Related Health Damage Compensation Act was enacted and established "charge". It could be said that this charge was the first Green tax by the Japanese central government. On the other hand, in the Japanese local governments' cases, the Hiroshima Prefecture over assess on Automobile tax from 1975 to 1982 in response to the Clean Air Act (Muskie Act of 1970) in US was the first example working on the Green Tax.
　 There were three discussion teams Green Tax; ①Ministry of the Environment and Ministry of Economy, Trade and Industry Team (They mainly discussed an emissions trading system and global warming tax based on the Kyoto Protocol), ②Kyoto University Team (Academic Approach), ③Local Government Teams such as Tokyo Metropolitan Government Team (Their aim was an expanding their taxation).
　 For the first time, the Tokyo Metropolitan Government used a "tax plan for encouraging greater use of environment friendly". This word means economic incentives for the purpose of carbon dioxide emissions reduction. The Tokyo Metropolitan Government revised its ordinance in 1999 and started to tack on fees to Automobile tax in 2001. Afterward, Ministry of Internal Affairs and Communications developed this concept and the Automobile Committee has discussed tax amendment using this method.

2. Expanding local environmentally related tax under the decentralization and the shifting of tax revenues from the national to the regional level
　 Since the Omnibus Decentralization Act of 1999, a lot of local governments strongly discuss about new taxes by local tax autonomy. In consequence, a lot of local governments introduced "industrial waste tax" for the disposal venders and "Forest protection tax" for the purpose of environment protection. Since the Mie Prefecture introduced "industrial waste tax" in April 2001, 28 local governments which have disposal sites introduced the tax. Subsequently, since the Kochi Prefecture introduced "Forest protection tax" in 2003, 33 local governments introduced the tax. In this regards,"Forest Protection tax" is not a new tax, its scheme is tacking fee on municipality tax.

3. Reasons of the lack of progress of Green Tax in Japan
①Abolishment of electricity and gas tax of 1989
　 There was "electricity and gas tax" within local taxes since 1950, it abolished in exchange for introducing consumption tax in1989.
②Power of influence the electricity industry and electricity shortage after the Great East Japan Earthquake
　 The electricity industry is powerful. Therefore it is difficult to introduce "electricity tax." In addition, since Japan met the Great East Japan Earthquake, Japan faced the lack of electricity. Currently the electricity charges rose. Then Japan hate people to say reintroducing "electricity and gas tax."
③Japanese people's philosophy
　 Japanese prefer economic growth and economic efficiency to a balance economic growth and environmental sustainability.
④ Risk of oil price fluctuations
⑤ opposition of economic groups
　 When Japan intends to introduce environment consumption tax such as EU countries' environmental tax, economic groups strongly oppose despite consumers are taxpayers.
⑥　Disagreements between government ministries
⑦　The public's resistance to tax increases
⑧　Disagreements over allocation of tax revenues

4. Overview: Natures and next challenge
　 Japanese local governments have a big portion of public services compared UK and Italy, France and so on. Japanese local governments discuss environmental tax because Japanese local governments assume a large role in environmental policies. However, current local environmental taxes revenue is low.
　 Most Energy taxes are national taxes, therefore it may be said it is easier that national tax as a narrowly-defined carbon tax but there are game of politics, opposing interests between ministries and opposition by industry groups. Then it is difficult to introduce a new environmental tax without a big wave of people opinion.
　 Therefore, it is easier to introduce a new environmental tax under local tax scheme. "Industrial waste tax" and "Forest protection tax" were successful because there was a shift in focus such as the decentralization and the shifting of tax revenues from the national to the regional level. So, if there is a big trend which the Japanese will be easy to address consensus-building on, Japan have the potential to introduce a new environmental tax in the future. Moreover there is a theory that local environmental tax is better than national because local governments are close to residents.
　 For the future, our next challenge is introducing a new Green Tax which provides an effective disincentive to choose whether to buy goods which an adverse effect on the environment.

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