Gasoline Tax Reduction: How Will Government Raise Needed Funds for Road Development?

Editorial

16:04 JST, November 6, 2025

The ruling and opposition parties have agreed to abolish the provisional gasoline tax surcharge that has been in place for half a century.

While lower gasoline prices will benefit consumers, it is necessary to secure alternative sources of funding for road-related projects and establish a new system that does not run counter to decarbonization efforts. The ruling and opposition parties have a responsibility to see to this.

Six ruling and opposition parties, including the Liberal Democratic Party, the Constitutional Democratic Party of Japan and the Democratic Party for the People, have agreed to abolish the provisional gasoline tax surcharge on Dec. 31 as part of measures against high prices. The corresponding surcharge on the diesel oil delivery tax will also be abolished on April 1 next year. They aim to pass the necessary bills during the extraordinary Diet session.

This marks the first measure taken against high prices under Prime Minister Sanae Takaichi’s administration. It is expected to reduce burdens on household budgets, among other benefits. However, for such a major revision — abolishing the tax surcharges after half a century — a future vision for the fuel-related tax system has not been presented in any detail at all.

The surcharge was first imposed in 1974 to supplement funding sources for road construction and maintenance. A surcharge of ¥25.1 per liter is currently added to the base tax rate of ¥28.7 per liter.

The revenue from the provisional gasoline tax surcharge was once a financial resource earmarked for road-related projects, and opposition parties criticized it as a breeding ground for wasteful public works projects.

The revenue from the provisional gasoline tax surcharge was incorporated into the general account in 2009. However, the then Democratic Party of Japan, which took power afterward, failed to find alternative funding sources for road construction and maintenance, and effectively preserved the surcharge by changing its name.

Annual revenue from automobile-related taxes for the central and local governments, including the gasoline tax, has totaled about ¥6 trillion in recent years. However, road-related expenditures amounted to about ¥9 trillion, meaning the current revenue is entirely insufficient.

With the abolition of the provisional surcharges, the central and local governments will lose about ¥1.5 trillion a year in tax revenue. Considering incidents such as the road collapse in Yashio, Saitama Prefecture, finding a way to raise funds for infrastructure development can be called an urgent issue.

Under their agreement, the ruling and opposition parties intend to raise a certain amount of funding by revising special tax measures, which lower corporate taxes under certain conditions, and increasing tax revenue by the end of the year. However, measures to secure stable funding sources have been postponed for a year.

Takaichi advocates “responsible, aggressive fiscal policy.” Will the tax reduction be covered by other tax increases or spending cuts? Without making every possible effort to gain understanding on this point, it cannot be called “responsible.”

It must not be forgotten that tax cuts could increase gasoline consumption and slow the spread of eco-friendly vehicles, creating a contradiction with the government’s decarbonization policy.

Given the necessity of infrastructure development and decarbonization, isn’t it reasonable to ask automobile users to bear a certain burden? It is essential to transform the tax system into one that suits the times from a comprehensive perspective, including factors such as vehicles, roads and the environment, regardless of power sources.

(From The Yomiuri Shimbun, Nov. 6, 2025)