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Japan's prominent industry groups have jointly called on the government to implement additional tax reforms aimed at promoting decarbonization and enhancing their competitiveness in the global market. The eight major industry associations, including the Japan Iron and Steel Federation, the Petroleum Association of Japan (PAJ), and the Japan Automobile Manufacturers Association, submitted their collective requests to the government on October 31st, with a specific focus on securing more tax incentives for investments in decarbonization.

These industry groups argue that it is crucial for the government to provide comprehensive support through tax reductions to increase the predictability of private-sector investments, particularly in response to rising operational costs. They have urged the government to eliminate taxes on depreciable fixed assets, citing this as a key factor contributing to the declining international competitiveness of Japan's manufacturing sectors.

One of the reasons for these requests is the dissatisfaction with the existing Carbon Neutral Investment Promotion Tax Credit Scheme (CNTS), which offers temporary tax credits for investments that contribute to decarbonization. The industry groups have criticized the CNTS for its short duration, limited scope, and low upper limits for investments, deeming it inadequate and impractical to support private-sector investments in Japan's decarbonization efforts.

These calls for tax reform are part of a broader set of requests made by Japanese industries to the government. Japanese businesses are concerned that their domestic investments are lagging behind the United States and the European Union, both of which have implemented more dynamic measures to address climate change. The U.S. Inflation Reduction Act and the EU's Carbon Border Adjustment Mechanism (CBAM) are cited as examples. However, some Japanese industry groups have opposed the CBAM's reporting obligations.

PAJ President Shuichi Kito has emphasized the importance of implementing tax measures in conjunction with budget allocations, highlighting that these measures should not be limited solely to initial investments. The industry groups are looking to the government to provide robust support for their decarbonization initiatives and to enhance Japan's competitiveness on the global stage.

According to the article by Procurement Resource, Japan's major industry groups, including the Japan Iron and Steel Federation and the Japan Automobile Manufacturers Association, have collectively urged the government to implement tax reforms to boost decarbonization and enhance competitiveness. They seek greater tax incentives for decarbonization investments, criticizing the current Carbon Neutral Investment Promotion Tax Credit Scheme as inadequate. These reforms are part of a broader effort to align Japan's climate efforts with global standards and increase private-sector investments in decarbonization.