Green tax to come into force in October

JIJI

The government will introduce an environmental tax in October to curb nationwide emissions of carbon dioxide, a move likely to trigger broad-based price hikes for electricity, plastic and other products.

The new tax on oil, coal, natural gas and other fossil fuels is designed to reduce emissions of the heat-trapping gas blamed for global warming. The revenue will be used for measures to promote renewable energies and to support power-saving initiatives by businesses and households.

The green tax will be levied as an additional charge on the existing oil and coal tax, and will be hiked in April 2014 and again in April 2016.

The current levy on fossil fuels comes to ¥2,040 per kiloliter for crude oil and petroleum products, but an additional ¥250 per kl will be imposed from October. The extra tax is set to increase to ¥500 in April 2014 and to ¥760 two years later.

The tax for natural gas and liquefied petroleum gas, which at present stands at ¥1,080 per ton, will be supplemented by an extra ¥260, rising to ¥520 at the start of fiscal 2014 and to ¥780 in April 2016.

The new green tax will generate an estimated ¥39.1 billion in the current fiscal year, but from fiscal 2016 annual revenue is projected to total around ¥262.3 billion.

The Environment Ministry estimates the levy will increase an average household’s annual costs by around ¥1,200 in fiscal 2016, and power companies and gas suppliers are already planning to pass the extra charge on to consumers.

Tokyo Electric Power Co. will reflect the levy in its power rates from September, meaning a standard household that consumes 290 kilowatt-hours per month will see its monthly power bill increase by ¥14.5.

While Japan’s nine other regional utilities will refrain from hiking energy bills in September, they may still do so at a later date. A Shikoku Electric Power Co. official said the company is simply waiting for the right time before hiking its electricity rates.

Gas suppliers, meanwhile, intend to raise their rates as soon as they exhaust inventories of liquefied natural gas bought before the green tax kicks in. An official at industry leader Tokyo Gas Co. said an average household bill will rise by up to ¥10.