Japan may expand fuel subsidies to limit energy costs

This is information released by the Japanese Minister of Economy, Trade and Industry on April 3.

The measure will be part of a new bailout package that Japanese Prime Minister Fumio Kishida has appointed for his cabinet to re-unify at the end of April to reduce the economic damage caused by the virus. fuel price and raw materials increase.

Minister of Economy, Trade and Industry Koichi Hagiuda told Japanese Public Radio and Television (NHK): “We are concerned that the yen is weak along with oil prices and gas natural escalation in the game Ukraine crisis is having a negative impact on business operations and people’s daily lives.”

According to Mr. Hagiuda, to further reduce the impact of rising fuel prices, the Ministry of Economy, Trade and Industry can expand the subsidy mechanism by lowering the base price and raising the payment ceiling, or ending combine the subsidy mechanism with the removal of tax activation provisions.

Japan implemented a temporary subsidy program in January to reduce sharply rising gasoline and other fuel prices. This move comes after tight global supply drives up oil prices, along with Russia’s military campaign in Ukraine, causing oil prices to continue to soar.

Koichi Hagiuda, Minister of Economy, Trade and Industry of Japan. (Photo: Reuters)

The subsidy ceiling was increased fivefold to 25 Yen (20 cents) a liter in March and the scheme was recently extended to the end of April from the previous plan to end at the end of March.

Minister Hagiuda said the current subsidy could be combined with the re-application of the “activation clause” enacted to cut taxes on gasoline and diesel, when gasoline prices remain above 160 yen. one liter for three consecutive months.

The provision was frozen to release funds to rebuild after the 2011 earthquake and tsunami disaster that caused the nuclear accident at Fukushima.

Mr. Hagiuda informed: “We are thoroughly analyzing the effect that can be achieved with a combination of the two options. The release of the trigger clause will reduce tax revenue for local governments and create various administrative tasks such as budget reorganization. We will have to look at how to mitigate those negative effects“.

Hagiuda reiterated that Japan will not leave the Sakhalin-1 and Sakhalin-2 oil and gas projects in Russia, but the resource-poor country will aim to reduce its dependence on Russian energy to match. with G7 allies.

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