Japan’s Takaichi Secures 1st Win with Agreement to Scrap Gas Tax by Year-end

The Yomiuri Shimbun

20:00 JST, November 1, 2025

The ruling coalition secured its first multiparty agreement on the abolition of the provisional gasoline tax rate by accepting the opposition’s demand to scrap the tax by the end of the year.

This breakthrough is an initial win for Prime Minister Sanae Takaichi’s administration, which continues to work as a minority coalition in both houses of the Diet.

“My cabinet’s top priority is tackling high prices. We aim to pass the bill in the current Diet session to abolish the provisional gasoline tax rate,” Takaichi said at her inaugural press conference on Oct. 21.

In cross-party talks, the LDP put forward a de facto abolition plan to lower gasoline prices using subsidies through the end of the year, stating that an immediate, full abolition would impose significant costs on businesses.

The opposition bloc, however, refused to concede abolishing the tax by the year-end.

Given Takaichi’s strong wishes, LDP Research Commission on the Tax System Chairman Itsunori Onodera was tasked with persuading industry groups.

Regarding alternative funding sources to compensate for declining tax revenues, LDP Policy Research Council Chairman Takayuki Kobayashi stated on Thursday that “it is not necessary to cover everything with stable funding sources at this point,” which effectively supports the plan for abolition by the end of this year.

The abolition of the provisional tax rate on diesel, agreed upon for April next year, was a commitment the prime minister campaigned on during the LDP presidential election.

Considering the impact on local governments, it had been excluded from the bill submitted by seven opposition parties in June.

“Ensuring the fulfillment of campaign promises leads to the stabilization of the administration,” said a high-ranking government official.