IMPACT ANALYSIS OF CAR-RELATED TAXES ON FUEL CONSUMPTION IN JAPAN

Abstract

This article presents an analysis of the impact of car-related taxes in Japan from the viewpoint of their impact on transportation policy goals, revenue generation and controlling transportation demand. They account for about 10 percent of all taxes raised and include taxes on buying cars, regular ownership and usage taxes, and fuel taxes. The authors developed a model of car usage by household to determine how taxes affect car ownership and use and how and if tax subsidies affect transit ridership. Similar research has been one in the EU and the U.S. One key element in Japan is the high share of rail transit, as much as 45 percent of commuter trips in Tokyo and nationwide averaging more than 30 percent of commuter trips. The model studied fuel consumption as a factor of car ownership, use and travel speed. Given current trends, fuel consumption is expected to rise 41 percent by 2010. The study sought to understand which car-related taxes would best reduce this growth in fuel consumption. It found that a fuel tax is more efficient than acquisition or ownership taxes, subsidies for mass transit work, incentives for manufacturers to improve fuel efficiency might work, but taxes are limited in how much they can reduce fuel use.