Japan extends tax breaks on low-polluting vehicles to keep mainstay auto industry going

To support Japan’s auto industry, the Japanese government extended tax breaks for low-polluting vehicles for three more years. The tax breaks are supposed to end in April, but a new plan approved by the government extended the tax breaks till April 2015. The country’s auto market has remained stagnant for several years but tax breaks given to buyers of hybrids and other green cars had somewhat revitalized the industry. Under the program, all hybrids and electric vehicles are tax-free, giving buyers of Toyata’s Prius or Nissan’s Leaf a 150,000 yen (US$1,500) saving. Buyers of other fuel-efficient models also get savings from the tax breaks. Aside from the tax incentives, the government has also given subsidies to green cars to encourage sales. As the country struggles to recover from the March 11 earthquake and tsunami, it has tried to raise taxes to address a massive public debt. But the government realizes that a heavy tax burden on its citizens could curb spending, so it has been offering tax incentives as a way to stimulate commerce. The auto industry is one of the pillars of the Japanese economy and there has been much concern over low demand, even as big companies like Toyota Motor Corp. face supply disruptions as a result of the March 11 earthquake. The floods in Thailand have delivered another blow to Japanese automakers because many of them have factories there, as well as major suppliers. (December 10, 2011)