Japan's ruling coalition has secured its first multiparty agreement by accepting the opposition's demand to abolish the provisional gasoline tax rate by the end of the year. This breakthrough marks an initial win for Prime Minister Sanae Takaichi's minority administration in both houses of the Diet. Takaichi has prioritized tackling high prices in her cabinet.
Prime Minister Sanae Takaichi's administration has achieved a breakthrough after months of stalled talks with the opposition over abolishing the provisional gasoline tax rate. On November 1, 2025, the ruling coalition agreed to scrap the tax by the end of the year, securing its first multiparty deal amid a minority position in both houses of the Diet.
At her inaugural press conference on October 21, Takaichi stated, “My cabinet’s top priority is tackling high prices. We aim to pass the bill in the current Diet session to abolish the provisional gasoline tax rate.” The Liberal Democratic Party (LDP) initially proposed a de facto abolition using subsidies to lower gasoline prices through year-end, arguing that an immediate full abolition would impose significant costs on businesses. The opposition bloc, however, insisted on scrapping the tax by year-end and refused to concede.
Responding to Takaichi's strong wishes, LDP Research Commission on the Tax System Chairman Itsunori Onodera was tasked with persuading industry groups. On alternative funding to offset declining tax revenues, LDP Policy Research Council Chairman Takayuki Kobayashi said on Thursday, “It is not necessary to cover everything with stable funding sources at this point,” effectively backing the year-end abolition plan.
The agreement also includes abolishing the provisional diesel tax rate in April next year, a pledge Takaichi made during the LDP presidential election campaign. It had been excluded from a bill submitted by seven opposition parties in June due to concerns over impacts on local governments. “Ensuring the fulfillment of campaign promises leads to the stabilization of the administration,” a high-ranking government official said.