Japan Passes Bill to End Provisional Gas Tax Surcharge, but No Decision Yet on Other Sources of Funding

The Yomiuri Shimbun

7:00 JST, November 29, 2025

A law to end provisional surcharges on the gasoline tax and the diesel transaction tax was unanimously passed during the House of Councillors plenary session on Friday morning. The gas tax surcharge of ¥25.1 per liter will sunset on Dec. 31, and the diesel transaction tax surcharge of ¥17.1 per liter will expire on April 1.

To keep consumers from holding back on purchases and to avoid confusion, the government is gradually increasing subsidies for gasoline and diesel fuel. The subsidy for gasoline per liter, ¥20 as of Thursday, will rise to ¥25.1 on Dec. 11 to match the gas tax surcharge and fall to zero when the surcharge ends.

In August, seven opposition parties submitted a bill to the Diet to end the gas tax surcharge on Nov. 1. On Nov. 5, six parties — the ruling Liberal Democratic Party, the Constitutional Democratic Party of Japan, the Japan Innovation Party, the Democratic Party for the People, Komeito and the Japanese Communist Party — formally agreed to scrap the surcharge on Dec. 31. They amended the bill to also include ending the diesel transaction tax surcharge.

Abolishing the tax surcharge is expected to reduce national and local tax revenues by about ¥1.5 trillion annually, but alternative sources of funding have not been decided on yet. A supplementary provision of the law explicitly states that a decision on securing stable funding sources “shall be reached within roughly one year of the promulgation of this law.”

The gas tax surcharge was introduced in 1974 as a two-year measure to improve road funding. After repeated extensions and rate hikes, it became a general revenue source without designated use in fiscal 2009.

Cabinet OK’s supplementary budget

The government made a Cabinet decision approving the fiscal 2025 supplementary budget bill underpinning its comprehensive economic measures on Friday afternoon. The general account totals ¥18.3034 trillion, with spending focused on helping people deal with rising prices, including through support for winter electricity and gas bills, and on investments in strategic sectors. The government aims to pass the bill quickly during the current extraordinary Diet session.

Spending in the bill is dominated by economic measures, which account for ¥17.7028 trillion in costs. More specifically, ¥8.9041 trillion will be allocated for “personal economic security and responding to rising prices,” which will include support for electricity and gas bills from January to March next year. The latter sum will also go toward “child-rearing support allowances in response to rising prices,” which will provide ¥20,000 per child.

The bill allocates ¥6.433 trillion for “realizing a strong economy through investments for crisis management and growth” in sectors like semiconductors and shipbuilding, and ¥1.656 trillion for “strengthening defense and diplomatic capabilities,” including through countermeasures for U.S. tariffs.

More than 60% of the revenue in the budget will come from issuing more government bonds, which will raise ¥11.696 trillion. That breaks down to ¥3.539 trillion in construction bonds, which generally fund public works and other projects, and ¥8.157 trillion in deficit-financing bonds.

Fiscal 2025 tax revenue is projected to exceed the government’s initial estimate. The ¥2.879 trillion surplus that is expected will also be used to finance the supplementary budget. Tax revenue is expected to reach about ¥80.7 trillion this fiscal year, surpassing ¥80 trillion for the first time.