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Press Release

FY 2006 Tax Reform Pertinent to the Ministry of the Environment

December 15, 2005

Major items pertinent to the Ministry of the Environment:

1.Global Warming Prevention and Atmospheric Environment Conservation

»Tax measures to promote popularization of low-emission and fuel-efficient vehicles include:
-For the greening of automobile tax, prioritizing eligible vehicles for tax reduction, and then extending the reduction period.
-Prioritizing eligible vehicles and extending the application period for tax preferential measures (such as setting the tax base at 300,000 yen less than the acquisition price) for the acquisition of fuel-efficient vehicles achieving a certain level of exhaust gas emission.
-Limiting diesel vehicles eligible for the acquisition tax preferential measure to those meeting the fuel efficiency standard for heavy-duty vehicles as well as achieving a certain level of exhaust gas emission.
-Creating a property tax reduction measure for non-road special motor vehicles that comply with the emission control standards.

»In order to promote the use of biomass, add facilities using biomass to the list of those eligible for the taxation system for stimulating investment to promote structural reform in the supply and demand of energy and also to the list of those eligible for the special depreciation system, such as recycling facilities.

2.Waste Management and Recycling Measures Aiming at the Creation of a Sound Material-Cycle Society

» In order to promote the improvement of recycling facilities, extend the period of the special depreciation system regarding the recycling facilities and preferential measures for the property tax base regarding waste recycling and treatment facilities.
» In order to promote waste treatment measures
-Extend the period of preferential measures for the property tax base regarding waste treatment facilities.
-Expand preferential measures regarding waste asbestos treatment facilities.

3.Environmental Pollution Prevention, Securing of Relief and Safety of People

» Extend the periods of the special depreciation system and the property tax base preferential measures for pollution control facilities.

4.Future Issues

» As for the environment tax, the following was stated at the beginning of the "Future Issues" section of the FY 2006 Tax Reform.
 In order to play a leading role in combating global warming in the world, Japan, as an environmentally advanced nation, has decided to attain the 6% reduction target under the Kyoto Protocol Target Achievement Plan. In April, 2005, the cabinet decided to have both the national and local governments initiate various policies and measures in this regard. Bearing in mind that the first commitment period of the Kyoto Protocol will begin in 2008, Japan will examine environment taxes (carbon tax) comprehensively, by taking the following into consideration: its role in overall policy measures, its overall effect, its influence on the national economy and international competitiveness of industries, and its relation to the existing tax system, while gaining the understanding and cooperation of taxpayers.

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