Japan is revamping its automotive tax system to impose levies based on mileage, as revolution in green and sharing technologies squeeze revenue under the current framework.
Car owners are currently taxed according to their vehicles' engine displacement, which is not an effective measure for electric and hybrid vehicles. The rise of car-sharing also means fewer people own cars at all.
The ruling Liberal Democratic Party and junior partner Komeito are expected to draft a plan in mid-December that will likely tax cars based on mileage and weight instead, so the government does not lose out on vehicles that are on the road.
The country currently has three types of auto taxes. Owners pay a 3% tax on the purchase price when they buy a car, an annual automobile tax based on engine displacement, and a weight tax at inspections required once every two years.
The change will apply to the annual auto tax, which now comes to 34,500 yen ($303) a year on cars with engines over 1 liter and up to 1.5 liters. The amount changes with every half-liter.
