Japan Inc. raises car tax on kei-cars to compensate for tax revenue losses and to eventually eliminate kei-cars

Kei-car tax increase The number of drivers on the roads is decreasing yearly in relation to Japan’s decreasing population which has hit negative growth falling significantly in 2014 recording the lowest number of births in Japan’s history. This is going to have a significant impact on Japan’s automotive industry since there are fewer drivers resulting in reduced car sales. A recent article suggested fewer young Japanese in their twenties are obtaining their drivers licenses. In fact, in the area where I live, three large driving schools will be closing down for lack of new students wanting to obtain their drivers license.

In order to reduce household costs, more and more Japanese drivers have been purchasing what are known as K-cars. A kei-car, K-car, or kei jidōsha (軽自動車, “light automobile”), is a Japanese category of small vehicles with engines smaller than 1,000cc, including passenger cars (kei cars or kei-class cars), microvans, and pickup trucks (kei trucks or kei-class trucks). They are designed to comply with Japanese government tax and insurance regulations. With high sales in Japan, this type of car is generally too specialized and too small to be profitable in export markets.

Up until last year, the yearly tax on kei-Cars was ¥7,200 which is what I paid in car tax for the kei-car I drive. But because more Japanese are driving kei-cars to reduce household costs on transportation, this subsequently resulted in the Japanese government losing revenue on car taxes like in previous years as more Japanese began driving kei-cars. Today, I received in the mail my tax bill for the kei-car I drive. Compared to previous years the car tax was raised to ¥12,900. That is roughly a 80 percent increase in tax. Naturally, this really f–king pissed me off because that’s a large tax increase to compensate the Japanese government for a drop in car tax revenues. The thing about it is, you have no way to retaliate and are forced to pay this extortionist compensatory tax. You have no options and sign no contract to pay this increase in tax.

This is becoming more common in Japan as its predatory government working with Japan’s corporations continue tinkering with every area of commerce it possibly can to increase taxes, including a recent raise in road tolls on certain segments of expressways in Japan. Of course, Japanese will passively roll over and suck up this tax paying without resentment or doing anything to counter the increasing taxes being applied to the Japanese people. This exploitative kei-car tax is going to f**k over small and medium sized business owners who use kei-cars for business. Some businesses have small fleets of kei cars noted by the black background with yellow characters indicating commercial use. The kei-car tax on these cars used for business with the black license plate with yellow characters pay half what kei-cars used for personal use are taxed. Let’s say a business owner operates a fleet of ten kei-cars for his business. That would be a yearly ¥57,000 increase in taxes. Over the life of his fleet of kei-cars, it could cost him roughly ¥570,000 or more depending on the life of the kei-car. The increase in the car tax for the kei-car was stated at first to go from ¥7,200 to ¥10,800, but that figure was unreliable coming from the Japanese government when the announcement was first made. The increase went to ¥12,900, not ¥10,800 as originally stated by the government in 2014. That’s a ¥5,700 (US$53.27) tax increase, or about a 80 percent increase. Also, considering wages have been stagnant in Japan and with a coming expected increase in the consumption tax next year, this will take a larger portion of income to operate a kei-car than previously.

What did Yoshitaka Shindo, the Minister for Internal Affairs state about this tax on kei-cars? He simply remarked that, “Japan needs to re-balance our priorities.” Shindo didn’t mean the Japanese people need to “rebalance their priorities”, what Shindo meant is that Japan’s car manufacturers along with the government will be slowly eliminating kei-car production so that Japan can compete overseas with larger car production. Wtf, Shindo, what you really mean is you are looking to increase tax revenue to compensate for lost revenue on kei-cars compared to the higher tax on larger cars, just say it alright? What these corporate politicians working with major car makers for Japan Inc. aren’t telling people, is that they want to wean Japanese off their dependence on kei-cars to get Japanese back on large cars to stimulate Japan’s domestic car manufacturing market and to compete overseas.

What this increase means is roughly a ¥200,000 tax liability over the average life of a kei-car with a ¥12,900 yearly tax. Multiply that by the estimated 20 million kei-cars on Japan’s roads and that is a huge source of tax revenue. Comes in at ¥120 billion in increased tax revenue for the first year of the increase. The plan is over the next three years, to raise the tax on kei-cars to around ¥24,000. When the tax on kei-cars is raised to ¥24,000, which is about the equivalent of the tax on larger cars, it will bring in ¥480 billion a year in tax revenue just on kei-cars. It doesn’t matter what the Japanese themselves prefer or want to drive based on their incomes, but rather what Japan’s corporations force their lackey corporate politicians to pass laws favoring car manufacturers, including this tax. Japan being a mercantile nation is probably the beginning of the end of kei-cars in Japan. As a mercantilist nation, Japan Inc. is a command and control economy despite what people think, with very little the individual Japanese can do about their circumstances including the preference to drive kei-cars as a cheaper form of transportation – until now.

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One thought on “Japan Inc. raises car tax on kei-cars to compensate for tax revenue losses and to eventually eliminate kei-cars

  1. Actually the Suzuki Alto, called the Maruti in India is the most popular car in the world with more being produced than any other model. I agree that taxes Going up for Kei cars sucks. I have a tanto myself and I love it. Used to have a 911. Like the Tanto more. As the society ages and the population declines, some things are inevitably going to get more expensive including taxes of all kinds. No use complaining or blaming. Just manage your offshore portfolio well, and you will be able to afford it. And ride your little foldy bike. No tax on that one, right?

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