The Japanese government has decided to act reasonable by extending the duration of tax breaks, meant for low-polluting vehicles, by another three years. It is believed that, in a bid to offer support to the auto industry that contributes immensely in the country's growth, the government has kept the tax impositions at bay for the time being.
The tax breaks, which were set to culminate in April, will now go on until April 2015, according to a plan drawn out by the Cabinet on 10th December 2011.
As a matter of fact, Japan’s auto market is floating in troubled waters for a long time now; however, the popularity of hybrids and various environment friendly cars has been on a ride. In view of the tax breaks and avidness towards fuel efficiency, these vehicle segments have been the sole source of light in the tunnel.
Under the government scheme, hybrids and electric vehicles would remain out of the tax ambit, eventually trickling down about 150,000 yen or $1,500 benefit to the buyers of the Toyota Prius or the Nissan Motor Co. Leaf.
Along with the tax breaks, the sales of “green” cars have been given further push by the government as it has made these cars entitled to subsidies, but whether these would also be extended seems to be unclear.
Japan is currently burdened severely under the public debt and is therefore making efforts to raise taxes. It must be noted that the auto industry has proved to be a primary lifeline for the Japanese economy. The government has been going through sleepless nights due to the serious concerns regarding the depressing auto demand.
The discouraging situations persisting in the market are the result of unproductive operations being undertaken by top manufacturers like Toyota Motor Corp. that are fighting-off shortage of supplies. The absence of sufficient supply was caused due to the 11th March catastrophe, as well as flooding in Thailand, where several Japanese car makers have factories and suppliers.
Thus, the Japanese auto industry is expected to count on the laurels earned by hybrids and eco-friendly cars further, as the plus points offered by these vehicles still remain intact.
