Japan extends tax breaks on low-polluting vehicles

2011-12-10 08:36

Japan is extending tax breaks for low-polluting vehicles by another three years to help support the nation’s mainstay auto industry.

The tax breaks for gas-electric hybrids and electric vehicles, initially set to end in April, will continue until April 2015, according to a plan approved by the Cabinet today.

Japan’s auto market has been stagnant for years, but demand for hybrids and other “green” cars, prompted by tax breaks and interest in fuel efficiency and the environment, has been the solitary bright spot.

Japan has a massive public debt and has been trying to raise taxes. But the effort is a delicate balancing act because a heavy tax burden is likely to crimp spending as the nation struggles to rebound from the devastation of the March 11 earthquake and tsunami.

The auto industry is a pillar of Japan’s economy. Concerns have been growing about lagging auto demand as top manufacturers such as Toyota Motor Corp fight supply disruptions from the March 11 disaster, as well as from flooding in Thailand, where many Japanese automakers have factories and suppliers.

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