Impact Analysis of Car-Related Taxes on Fuel Consumption in Japan

The authors built a model that calculates the fuel consumption of cars based on the interaction of car ownership, use, and travel speed. The model determined that fuel consumption is to increase in Japan by about 41% by the year 2010 given current trends. The purpose of this paper is to see if this situation can be alleviated by carrying out an impact analysis of Japanese car-related taxes on the fuel consumption of cars. The results obtained from this analysis are: (1) a fuel tax is more effective than a car acquisition or ownership tax; (2) a subsidy for mass transit (rail) is effective; (3) a tax break or incentive to car manufacturers to improve fuel efficiency may be effective; and (4) taxes are limited in their effect on reducing fuel consumption.