Overview

• Ruling and opposition working-level negotiators agreed to aim for a conclusion next week, yet gaps over replacement revenue leave a deal uncertain.
• The Environment Ministry and the National Institute for Environmental Studies estimate that abolishing the provisional rate would raise CO2 emissions by 6.10 million tons in 2030.
• The projection assumes a 2026 repeal and attributes higher emissions to lower fuel prices boosting car use and broader economic activity beyond transport.
• Environment Minister Keiichiro Asao said the future of the surcharge must be considered with environmental impacts in mind.
• The ministry asked that the 2026 tax reform include alternative measures, potentially a new levy, to prevent an emissions increase and support climate goals.