TOKYO: Japan’s ruling Liberal Democratic Party on Friday compiled a proposal calling on the government to drastically expand its subsidy program for oil wholesalers, in order to improve the country’s measures to tackle soaring crude oil prices amid heightened tensions over Ukraine.
In the emergency proposal, the LDP said that the subsidy program should be revised in a way that makes it possible for the government to provide such businesses with a form of assistance eclipsing the so-called trigger provision aimed at temporarily cutting gasoline taxes.
Under the current subsidy program, if the nationwide average retail price of regular gasoline rises to 170 yen per liter or higher, oil wholesalers are paid up to 5 yen per liter to curb rising prices of gasoline and other fuel.
The trigger provision, which allows the country to cut gasoline taxes when gasoline prices surge, is currently suspended. If resumed, the measure will give a tax reduction effect of around 25 yen per liter. The LDP in the proposal urged the government to discuss a measure that will be even more effective than the trigger provision.
While the government activated the subsidy program only on Jan. 27, the amount of subsidy, set based on weekly gasoline and crude oil prices, reached its upper limit of 5 yen per liter in just two weeks from its activation due to escalating crude oil prices.
The 80 billion yen set aside for the program under the fiscal 2021 supplementary budget could run out even before the fiscal year ends next month. Due to this possibility, the LDP in the proposal pointed to the need to use reserve funds under the fiscal 2021 budget to allocate necessary expenses for the subsidy program.