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Japan govt plans tax breaks on low-emission cars from April 2017: sources

[TOKYO] Japan's government will introduce tax breaks on low-emission cars from April 2017 in a bid to accelerate a shift to environment-friendly vehicles and to support car sales, ruling party and government sources told Reuters on Wednesday.

The plan will be implemented at the same time the country's sales tax rises to 10 per cent from the current 8 per cent, according to the sources, who insisted on anonymity because it has not been finalised.

The car plan is contained in a draft of the ruling bloc's annual tax code revision seen by Reuters.

Also in April 2017, the current automobile tax will be revised and a car acquisition tax will be abolished.

Under the scheme, electric cars and highly fuel-efficient cars will be tax exempt, and a tax rate of up to 3 per cent will be levied on car purchases depending on fuel efficiency.

The new measures should produce tax revenue of around 89 billion yen (S$1.02 billion) in the fiscal year ending in March 2018, about 21 billion yen lower than the current year's income from the car acquisition tax, they said.

The draft tax revision is expected to be endorsed on Thursday by the ruling Liberal Democratic Party and its coalition ally Komeito.