In order to combat the rise in oil prices due to the Ukraine Russia war, Japan has decided to undertake countermeasures to tackle the problem. The Central Government announced it would accelerate these countermeasures with a subsidy program for wholesalers of oil. The increase in crude oil costs is also expected to make inflation in Japan higher. This is a problem that the Central Government of Ukraine wishes to tackle, especially after the adverse effects on the economy due to the coronavirus pandemic.
Kavan Choksi is an esteemed entrepreneur and known for his expert skills in finance and investments. According to him, the Japanese government is doing all it can to ensure the economy does not face a high inflation rate. This will make products and services costlier and hard on the people. In an effort to prevent the increase in the costs of gasoline prices, the government has begun to offer subsidies to wholesalers of oil at the end of January so that the average cost of regular gasoline could be kept at ¥170 for every liter. The limit for the subsidy is presently ¥5 for every liter; however, the government has plans to increase it to ¥25 per liter.
This ¥5 subsidy cannot cope with the spike in the prices of oil as its average price has increased for eight weeks in a row. As per the Agency for Natural Resources and Energy, this price was ¥172.8 on Monday- it has increased in the last week and is the highest price in over 13 years. The Japanese government is now taking immediate steps to arrest this soaring price for controlling inflation in the economy.
The subsidy program is a hope to arrest the current scenario in the nation
The subsidy program was announced at a news conference by the Chief Cabinet Secretary of Japan, and it will begin next week. It is scheduled to continue till this month. The government is hopeful that this Program will help the situation for some time.
Opposition parties have recommended the implementation of a tax cut
Opposition parties in the nation have suggested a tax cut urging the government to temporarily go ahead with the decision. They have recommended a temporary tax cut of about ¥25 per liter.
In Japan, a tax cut might be implemented if the average cost of regular gasoline stays above ¥160 for three months in a row. However, a legal amendment will be needed for implementing this tax cut. The policy had to be frozen since 2011 in a bid to protect the tax revenue for reconstructing the Tohoku region after the earthquake that hit Great East Japan.
According to Kavan Choksi, the Japanese government, at that time, did not choose that option as it did not cover kerosene or heavy oil. However, the government will monitor the situation, and the possibility of the implementation of a tax cut will not be ruled out completely in the future. However, this time, the subsidy program that will be incorporated soon will.