Japan’s transport ministry proposes delaying aviation fuel tax rise
Airlines are considering domestic fuel surcharges while the ministry prepares a fiscal 2027 request to retain the current rate of 15,000 yen per kilolitre.
- Japan's transport ministry is proposing to delay a planned aviation fuel tax increase from 15,000 to 18,000 yen per kilolitre, which is scheduled for fiscal year 2027.
- The proposal is a response to soaring fuel prices resulting from turmoil in the Middle East, with the ministry aiming to continue providing tax support to airlines.
- The tax is ultimately paid by consumers through domestic airfares, and the ministry's request will also include maintaining current tax reductions for routes to Okinawa and remote islands.
An aviation fuel tax increase from 15,000 to 18,000 yen per kilolitre is scheduled to take effect in Japan when fiscal 2027 begins next April.
The transport ministry wants the current rate left unchanged, Jiji Press has learnt.
Fuel prices have soared amid turmoil in the Middle East, leading the ministry to conclude that tax support for airlines should continue.
The proposal will form part of the ministry’s fiscal 2027 tax system reform requests.
Passengers ultimately bear the levy through domestic airfares, even though it is imposed on fuel consumed by domestic flights.
Money collected is used for airport improvements and noise-control measures.
A COVID-19 support measure for airlines brought the rate down to 9,000 yen per kilolitre in fiscal 2021.
The concession has been gradually pared back since fiscal 2022, with a rate of 15,000 yen applying in both fiscal 2025 and fiscal 2026.
The statutory level is 26,000 yen per kilolitre, apart from the separate rates for Okinawa and remote-island routes.
Route-specific reductions will also be included in the request.
The rate for remote-island flights would remain at 11,250 yen per kilolitre rather than the statutory 19,500 yen, while services to and from Okinawa, the country’s southernmost prefecture, would continue at 7,500 yen per kilolitre instead of the statutory 13,000 yen.
Fuel surcharges currently added to international airfares may also appear on domestic tickets, an option airlines are examining in response to higher fuel prices.
The likely major impact on household finances has led the ruling Liberal Democratic Party to ask the government for measures supporting airlines.
[Copyright The Jiji Press, Ltd.]
