Japan Mulls Heavier Auto Tax on Luxury EVs

Tokyo, Dec. 4 (Jiji Press)–Japan’s government and ruling coalition are considering introducing a system designed to increase the annual automobile tax according to the weight of electric vehicles, for which the minimum rate is currently applied, informed sources said Thursday. The measure is intended to address the current imbalance in automobile taxation at a time when the number of luxury EVs with heavy bodies, which accelerate road deterioration, is increasing. The government and the ruling camp led by the Liberal Democratic Party plan to include the change in a tax system reform package for fiscal 2026, which starts next April. Currently, the automobile tax rate, imposed during the period of car ownership, is set in accordance with the engine displacement. The minimum rate is applied for EVs and fuel cell vehicles that have no engine. For example, the owner of a high-end EV priced at 14 million yen needs to pay 25,000 yen in vehicle tax, about 10,000 yen less than the amount paid by the owner of a 2.8-million-yen hybrid family car. In November, the Local Public Finance Council of the internal affairs ministry proposed that the taxation system, which applies the minimum tax rate to motor-driven EVs and FCVs, should be revised in the near future. The council indicated that introducing vehicle weight as a factor in determining the size of automobile tax would be appropriate. END [Copyright The Jiji Press, Ltd.]