With the ruling and opposition parties at loggerheads over tax-related bills, the fiscal 2008 tax-code bill will likely fail to be enacted on or before March 31. As a result, temporarily raised gasoline and other road-related tax rates will come down to normal, leading, at least for a while, to lower gasoline prices. Drivers may welcome it, but the story is not simple.
Tax revenue will be lost and seven special tax measures, such as the tax exemption for interest accrued on off-shore deposits and tax reductions or exemptions for the registration of real estate holdings, will expire. People will face uncertainty in their dealings. Both the ruling and opposition forces should make mutual concessions to avoid such confusion. Prime Minister Yasuo Fukuda and the Democratic Party of Japan leader Ichiro Ozawa, especially, should show strong leadership to break the stalemate.
The DPJ opposes maintaining the temporarily raised tax rates as well as the system under which revenues from the road-related taxes are used exclusively to fund road construction.