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Press Release

FY 2005 Tax Reform Pertinent to the Ministry of the Environment

December 15, 2004

Tax reform for FY 2005 was finalized on December 15, 2004 at the tax reform consultative meeting of ruling parties.

<Major items pertinent to the Ministry of the Environment>

1.   Global Warming Prevention Measures and Atmospheric Environment Conservation Measures
(i)   Tax measures to promote popularization of low-emission and fuel-efficient vehicles include:
  -   Two-year extension tax reduction measures for acquisition of low-emission vehicles (LEVs).
  -   Extension of term for tax reduction on vehicles complying with the 2005 emission standards (diesel buses and trucks).
  -   Extension of term for the preferential measures covering the facilities supplying fuel to LEVs (charging facilities for fuel-cell, natural gas and hydrogen vehicles)
(ii)   Tax measures to promote measures on carbon dioxide absorbent
  -   Extension of terms for special deduction measures on forest income and preferential measures for deductible expenses of afforestation cost related to forest management plans.
2.   Waste Management and Recycling Measures Aiming at the Creation of a Sound Material-Cycle Society
(i)   Promotion of waste management measures
  -   Extension of terms for special depreciation system for industrial waste treatment facilities including high temperature incinerators, smoke and soot treatment facilities and PCB contaminated material treatment facilities.
  -   Extension of term for specified disaster prevention reserve system.
3.   Establishment of safe and secure society
(i)   Promotion of pollution prevention measures
  -   Setting up special depreciation system for volatile organic compounds emission reduction facilities and preferential measures for tax base for fixed property tax and business office tax.
(ii)   Promotion of measures to mitigate what is called "heat-island" phenomenon
  -   Expand (creation of preferential measures on greenery facilities in designated greening areas) and extend the preferential measure for tax base on the greenery facility.

As for the introduction of carbon tax, the consultative meeting concluded as follows:

We have been consuming by far the largest amount of fossil fuels we have ever had, enjoying rich and convenient lifestyle. On the other hand, we are emitting large amount of carbon dioxide resulting in leaving future generation negative legacy, namely climate change. While addressing this situation, it is important to ensure economic growth consistent with environmental protection in line with the entry into force of the Kyoto Protocol in February 2005 as well as accompanying Japan's obligation, taking due account of assessment and review of the Climate Change Policy Programme. To this end, we are committed to review without delay the desirable structure of carbon tax, if necessary, on the basis of the result of comprehensive view on every policy measure.

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