The government will end the measure to cut the auto special consumption tax at the end of this month as scheduled. The auto special consumption tax is an indirect tax that imposes 5% of the vehicle price when purchasing a new car. The government lowered the tax to 3.5% last year to boost domestic demand.
According to the Ministry of Economy and Finance on the 19th, the government will not extend the auto special consumption tax cut (3.5%), which is set to expire at the end of this month, and will restore it to the statutory rate of 5%.
Earlier, in March 2020, when consumption plunged due to the spread of COVID-19, the government lowered the rate from 5% to 1.5%. It then applied a 3.5% rate from July 2020 to June 2023. From July 2023 to the end of 2024, it was restored to the statutory rate of 5%, and then, to boost domestic demand last year, the special consumption tax was cut again.
A senior government official said, "With domestic demand entering a recovery phase, there is no longer a reason to extend the special consumption tax cut," and added, "We will end the tax cut measure as announced last year."