Prime Minister Yukio Hatoyama on Tuesday decided to maintain the current rates on gasoline and other road-related taxes throughout fiscal 2010 even though the road-related tax system will be overhauled by April 2010. The abolition of surcharges on road-related taxes was a main campaign pledge of the Democratic Party of Japan, and the question of whether to maintain the tax rates, including the surcharges, had become a focal point of fiscal 2010 taxation policy.

If Mr. Hatoyama had chosen to stick to the campaign pledge, the gasoline tax would have fallen about ¥25 per liter, but the central and local government would have lost ¥1.7 trillion and ¥800 billion in tax revenue, respectively. Mr. Hatoyama’s decision is reasonable since tax revenues in fiscal 2010 are expected to fall to around ¥37 trillion amid plans to limit bond issuance to ¥44 trillion, roughly the same level as in fiscal 2009. It will also help prevent a rise in greenhouse gas emissions.

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