Cut car taxes to boost sales, industry group head urges


Hoping to boost car ownership in a shrinking domestic market, the Japan Automobile Manufacturers Association will ask the government to lower car-related taxes to ease the financial burden on automobile owners, the newly appointed head of the car industry group said Tuesday.

“What we are insisting on behalf of car users is . . . a review of the tax rates, if the government will review its spending,” JAMA Chairman Satoshi Aoki said in an interview.

Aoki, also the chairman of Honda Motor Co., took the helm of JAMA last month.

On March 27, Prime Minister Yasuo Fukuda announced a willingness to allow revenue from road-related taxes, including some of the taxes imposed on cars, to be freed up for purposes other than road projects in fiscal 2009, which starts next April.

Asked how much taxes should be cut, Aoki responded: “I can’t say for sure, but the tax rate should be at a level satisfactory to taxpayers.”

Car owners have to pay various auto-related taxes, including a 5 percent levy at the time of purchase and another tax based on the vehicle’s weight.

As demand slows in the domestic market, auto manufacturers are hoping lower taxes will help spur car ownership.

Aoki’s comments signal a U-turn in JAMA’s stance. Previously, the association had asked the government not to use tax revenues for anything other than building roads.

Asked to comment on the future of the auto market, Aoki said that although the domestic market is contracting, the overall outlook remains positive.

“As for the emerging markets, demand in China is still strong, although some wonder how long the rapid pace (of expansion) will continue,” he said. “We can say the same thing about India, Southeast Asia and South America.

“As a result, I expect the automobile industry as a whole to keep on growing,” Aoki said.