December 14, 2006

JAMA Response to Fiscal 2007 Tax Revision Proposal

Fujio Cho, Chairman

The Japan Automobile Manufacturers Association, Inc. (JAMA) welcomes some of the government-proposed revisions of the national tax system for fiscal year 2007 (ending March 31, 2008).  Considering the expansion of economic globalization and increased international competition, Japan’s automobile industry views as positive various of the proposed measures, including the sweeping reform of the depreciation system and the extended application of reduced tax rates on vehicles with superior environmental performance.

However, JAMA takes issue with the concept of revising the use of taxpayer revenue that to date has been earmarked exclusively for road construction.  This proposed modification effectively ignores the voices of some 10.33 million Japanese taxpayers.  Especially unacceptable are the national policy shifts represented by the proposal to (1) reallocate to Japan’s general revenue pool the tax revenue that exceeds actual expenditures on roads, and (2) maintain the application of the current, provisional tax rate for road-designated funds from fiscal 2008 onward.

From the perspective of consumers who are automobile users and taxpayers, JAMA continually lobbies for a simplification of Japan’s automotive tax system and a reduction of the auto tax burden, while at the same time advocating what it believes to be a correct and rational use of road-designated tax revenue.

Finally, JAMA is disappointed that the government’s tax revision proposal for the coming year makes no provision for reducing the corporate effective tax rate.  Measures to ease corporate taxes, whose rates are high internationally as well as domestically, have been urgently called for by JAMA and the business community in Japan.