Japan to ignore carbon tax in 2022 tax reform package

The ruling Liberal Democratic Party and its coalition partner, the Komeito, have decided not to include the introduction of a carbon tax in their fiscal reform program for fiscal 2022, informed sources said Thursday.

Rather, a carbon tax will be mentioned as an important issue that needs to be considered, along with various other policies aimed at achieving a carbon neutral society.

The government and the ruling bloc are expected to strike large-scale deals on the issues around FY2023 or later. But the plan may face obstacles due to continued opposition from the business community reluctant to shoulder the heavier burdens.

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

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

The draft reform package, compiled on Thursday, said ruling parties would hold specialist and technical discussions on a mix of policies, including a carbon pricing system.

The business community is opposed to taking on heavier burdens related to greenhouse gas emissions mainly due to economic weakness amid the pandemic and recent energy price spikes.

“Discussions cannot be started on a specific system until the coronavirus and energy price issues have subsided,” one of the sources said.

The European Union and China have already introduced an emissions trading system whereby participating companies can buy emission allowances from companies that have reduced their emissions more than necessary.

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

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About Natalee Broderick

Natalee Broderick

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