The Noda Cabinet on Dec. 10 endorsed a fiscal 2012 tax outline. Except for reductions in the automobile weight tax, the plan does not include major changes, since a separate plan to raise the consumption tax in the mid-2010s is scheduled to be adopted later.
Although the tax plan includes minor reforms, it fails to show how Prime Minister Yoshihiko Noda hopes to revitalize the country in the wake of the March 11 disasters and the Fukushima nuclear fiasco, and in the midst of economic stagnation.
Democratic Party of Japan lawmakers had called for abolishing the automobile acquisition and weight taxes to support Japan's car industry, which is suffering from a strong yen, and to help prevent it from moving their production bases to foreign countries. The Finance Ministry opposed the abolition, fearful of a big fall in tax revenues. Eventually the government and the DPJ struck a compromise — reducing the automobile weight tax, which normally brings some ¥700 billion in revenues annually, by some ¥150 billion, while keeping the automobile acquisition tax intact.