Japan Stops Tax Law Provision for Oil Tax Cut

The Japanese government is planning to scrap a tax law provision that has oil taxes cut when gasoline prices surge, in order to prevent a tax revenue fall, which would affect postquake reconstruction measures, it was learned Thursday.

A tax revenue fall when the provision is applied could total some 450 billion yen or more, while the government is expected to need more than 10 trillion yen for its reconstruction budget.

The provision will be put into motion if, in the internal affairs ministry’s monthly retail price report, the average regular gasoline price remains above 160 yen per liter for three months in a row.

Once the provision is invoked, the gasoline tax is cut by about 25 yen per liter and the measure is retained unless the gasoline price falls short of 130 yen for three consecutive months.

Gasoline prices have been exposed to upward pressures on supply shortfalls stemming from unrest in the Middle East and the March 11 earthquake and tsunami in Japan

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