Tokyo Government Considers Extending Gasoline Subsidy Amid Ruling Party Discussions

Regarding the gasoline subsidy (a drastic change mitigation measure) whose handling after the end of April has not yet been determined, there has been talk of extending it within the ruling party, and the government is expected to seriously consider it in the future. The photo was taken in September 2022 at a gas station in Tokyo. (2024 Reuters/Kim Kyung-Hoon)

TOKYO (Reuters) – Discussions have emerged within the ruling party to extend the gasoline subsidy (a drastic change mitigation measure) whose handling after the end of April has not yet been determined, and the government is expected to seriously consider it in the future. Ta. It is likely to be extended until at least the summer. This was revealed by multiple government and ruling party officials. The discussion will also focus on the handling of electricity and gas subsidies, with discussions on the extent and scale of their extension.

Gasoline subsidies were introduced by the government in early 2022 and have been extended repeatedly. Some within the government say, “This is an unusual policy that fixes prices that should be determined by the market, and we want to end it as soon as possible.” (Ministry of Economy, Trade and Industry). On the other hand, within the ruling party, the prevailing opinion is that an extension is inevitable, such as, “Public opinion towards the LDP is extremely harsh due to the issue of slush funds, and although we should be looking for a way out, if we get the timing wrong, the party will be in jeopardy.”

Even within the Ministry of Finance, support for the ruling party is slumping, and with the possibility of a House of Representatives election before the end of the year, some executives are saying that “an extension is inevitable.”

Finance Minister Shunichi Suzuki told the House of Representatives Finance and Financial Services Committee on the 16th, “There is nothing decided at this point regarding the exit beyond the end of April. We will decide,” he said.

Last October, Prime Minister Fumio Kishida announced a policy to extend gasoline, electricity, and gas subsidies until spring, which were scheduled to end at the end of the year. Subsidies for electricity and gas are scheduled to be reduced from May onwards, but there is no indication as to how gasoline will be handled after May. As of the end of last year, the Kishida administration appears to have taken into consideration the intention of the Democratic Party of Japan, which insisted on invoking the trigger clause to reduce gasoline taxes. However, on the 6th of this month, the Prime Minister once again expressed his cautious stance on activating the trigger clause, and the extension of the subsidy has become the mainstream of discussion.

Regarding the extension of gasoline, electricity, and gas subsidies, “no serious discussions have yet begun” (Ministry of Economy, Trade and Industry, Ministry of Finance, and Cabinet Office). More than 6 trillion yen has already been invested in gasoline subsidies, and even within the Liberal Democratic Party, there are voices saying that they are “questionable from the perspective of eliminating fossil fuels” (a former cabinet minister). “It would be desirable to be able to draw up an exit strategy at the same time as extending the subsidy.” (Liberal Democratic Party mid-ranking member) pointed out that if the subsidy were to be terminated, the best time would be in the fall when demand for electricity is low, and “there is a possibility that it could be extended until at least the summer.” ( government officials).

The current subsidy system is set so that the national average price for gasoline is 175 yen per liter. Electricity costs are subsidized by 3.5 yen per kWh for household low-voltage electricity, and city gas costs are subsidized by 15 yen per cubic meter.

Our code of conduct:Thomson Reuters “Principles of Trust”, opens new tab

2024-02-16 11:17:56
#talk #extending #gasoline #subsidies #government #ruling #party #sources