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Japan May Drop New-Car Purchase Tax
Japan's government appears close to a decision about lowering or eliminating its costly purchase tax on new vehicles, Bloomberg News reports.
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Japan's government appears close to a decision about lowering or eliminating its costly purchase tax on new vehicles, Bloomberg News reports.
The Japan Automobile Manufacturers Assn. is pushing hard for the cut. It wants help to offset Prime Minister Shinzo Abe's plan to hike the country's general sales tax from 5% currently to 8% next April and 10% a year later.
JAMA predicts the proposed general sales tax increase will deal a "lethal blow" to car sales unless consumers get relief from the nine separate taxes they now pay to buy and operate a car in Japan. The group estimates that an $18,000 new car incurs more than $20,000 in taxes over the first year of ownership.
The association complains that Japan's tax burden on passenger vehicles is nearly three times that of the U.K. and 47 times that of the U.S.
JAMA notes that the country's last general sales tax increase in 1997 was followed by a 1-million-unit drop in car sales. Year-on-year demand for passenger vehicles in Japan in 2013 plunged 14% in January-March and 8% in April-June, according to the association.
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