Prime Minister Shigeru Ishiba has announced a phased reduction of gasoline prices by 10 yen per liter starting on May 22, 2025, as part of the government's measures to combat rising costs. This decision comes amid increasing public concern over inflation and the impact it has on daily life.
As of April 14, 2025, the cash retail price of regular gasoline stood at 186.5 yen per liter, marking an increase of 11.6 yen compared to the same period last year, when prices averaged 174.9 yen. The government aims to alleviate some of the financial burden on consumers by implementing this price cut, which will also extend to light oil, heavy oil, and kerosene, with reductions of 10 yen, 5 yen, and 4 yen per liter, respectively.
Prime Minister Ishiba stated that this measure would bring gasoline prices down to around 175 yen, a level reminiscent of prices observed shortly after Russia's invasion of Ukraine in February 2022. He emphasized that the government would utilize available funds to support this initiative.
Since January 2025, the national average price of regular gasoline had been kept around 185 yen per liter through government subsidies. However, these subsidies were halted on April 17, 2025, as falling crude oil prices and a stronger yen suggested that gasoline prices would soon drop below this threshold.
The government's latest strategy, however, has met with mixed reactions from the public. Online comments reflect a sense of skepticism, with many suggesting that a mere 10 yen reduction is insufficient to address the broader issue of rising living costs. Critics have labeled the initiative as "a drop in the bucket," and some have called for the abolition of the provisional tax rate on gasoline before any price cuts are made.
The provisional tax rate, which has been in place since 1974, adds an additional burden to consumers. It consists of a base tax of 28.7 yen plus a surtax of 25.1 yen, which has been extended multiple times since its introduction to fund road construction and maintenance. This long-standing tax has led many to question its relevance in today’s economy, especially as it contributes to the overall price of gasoline.
On April 24, 2025, the Liberal Democratic Party (LDP), Komeito, and Nippon Ishin no Kai held discussions regarding the potential abolition of this provisional tax rate. The LDP indicated that if a consensus is reached during year-end tax reform discussions, the provisional tax could be eliminated as early as April 2026. In contrast, Nippon Ishin aims for a quicker resolution, pushing for the tax's removal this summer, highlighting the significant differences in urgency among the parties.
Seiichi Hoshi, a TBS Special Commentator, noted the importance of reviewing all automobile-related taxes by the end of 2025. He pointed out that the continuation of the provisional tax for nearly 50 years raises questions about its necessity, especially in light of changing economic conditions and consumer needs.
As discussions continue, the public remains divided. While some express hope that the 10 yen reduction will provide relief, others argue that substantial changes are needed to truly address the underlying issues of inflation and taxation. Many are advocating for a broader reform that includes the elimination of the provisional tax, which they believe would significantly lower gasoline prices.
The debate around the provisional tax highlights a critical conversation about government taxation and its impact on citizens. As the cost of living continues to rise, the pressure is on the government to deliver meaningful solutions that resonate with the populace.
The government’s phased approach to reducing gasoline prices is set to begin on May 22, and while it may provide some immediate relief, the effectiveness of such measures will ultimately depend on the government's willingness to address deeper structural issues regarding taxation and consumer relief.
In the coming months, as the government navigates these complex discussions, it will be essential to consider the voices of the public and the potential long-term effects of its decisions on the economy and everyday life.
As the situation develops, many are watching closely to see how the government will balance the need for revenue with the pressing demands of a population grappling with rising costs.
