Japan Considers Weight-Based Tax on EVs to Fund Road Maintenance

The Japanese government is pushing to introduce a so-called "EV weight tax" that would impose additional levies on electric vehicles based on their weight.

According to Asahi Shimbun on Wednesday, Japan's Ministry of Finance is reviewing a plan to add surcharges to the vehicle weight tax paid during inspections for EVs and hydrogen fuel cell vehicles (FCVs). Under the proposed structure, heavier vehicles would pay more: 6,500 yen (approximately $42) annually for vehicles weighing 2 tons or less, 19,900 yen (approximately $130) for those under 2.5 tons, 24,000 yen (approximately $156) for vehicles 2.5 tons and above, and a flat rate of 3,600 yen (approximately $23) for kei cars.

In Japan, complaints have emerged that conventional internal combustion engine vehicles pay gasoline taxes while EVs using the same roads bear no equivalent burden, creating an unfair disparity. Critics also point out that EVs tend to be heavier than conventional vehicles, causing more road damage. The move also comes as automobile-related tax revenue has declined due to expanding EV adoption and improved fuel efficiency in conventional vehicles, making it urgent to secure funds for road maintenance and repairs.

If implemented, the measure is expected to significantly increase ownership costs for EV owners in Japan. Since Japan's vehicle inspection cycle is basically every two years, owners must pay two years' worth of taxes at once. For example, an owner of a Tesla Model X weighing 2.3 tons would see their tax bill swell considerably, with a two-year surcharge of 39,800 yen (19,900 yen × 2, approximately $258) added to the existing tax of 25,000 yen (approximately $162).

The Ministry of Finance is also considering tightening eligibility requirements for eco-friendly vehicle tax reductions. This would involve raising the fuel efficiency standards required for tax exemptions. A leading proposal would increase the fuel efficiency achievement threshold from the current 80% to 85%. If the stricter standards are adopted, the share of new vehicles qualifying for tax reductions would fall from 67% to 47%.

However, the Ministry of Economy, Trade and Industry, which represents the interests of the automobile industry, opposes increasing the burden on related companies, making it uncertain whether the Ministry of Finance's proposal will pass, Asahi reported.