Taxing even offline reactors

June 22, 2018

Prefectures taxing nuclear plants until the bitter end

http://www.asahi.com/ajw/articles/AJ201806220038.html

THE ASAHI SHIMBUN

Local governments lost a lucrative source of tax revenue when nuclear reactor operations were suspended in 2011, but they have found other ways to collect funds, even on idle reactors that will be decommissioned.

All 12 prefectures that host nuclear plants have passed ordinances by June that allow them to tax offline reactors.

One exception is Fukushima Prefecture, which decided to do away with all forms of local taxation on nuclear plants considering the special circumstances facing reactors in the prefecture following the March 2011 accident at the Fukushima No. 1 nuclear power plant.

The disaster led to the temporary suspension of operations at all 54 commercial nuclear reactors in Japan.

With the reactors idle, the local governments lost revenue from taxes imposed on nuclear fuel brought in for the reactor operations.

Seven years after the triple meltdown at the Fukushima plant, only nine reactors have resumed operations, and utilities have decided to decommission 19 reactors.

In addition to the tax on offline reactors, four prefectures have passed ordinances that allow for taxation of reactors that are being decommissioned. An estimated 1.1 billion yen ($10 million) in annual revenues is expected from such taxes on decommissioned reactors.

Such taxes could spread because more electric power companies plan to mothball reactors that have not only aged but also require costly upgrades required under stricter safety regulations in place since the Fukushima accident.

Since 1974, local governments that host nuclear plants have received tax grants and subsidies from the central government.

In 1976, Fukui Prefecture became the first local government to pass an ordinance for a local tax on nuclear plants, specifically on the nuclear fuel brought into a nuclear reactor. The tax revenues were to be used ostensibly for safety measures and to promote economic development.

In fiscal 2010, 13 prefectural governments, including Fukushima, collected a total of about 22 billion yen in revenues from the tax on nuclear fuel.

However, after the Fukushima accident led to the temporary shutdowns of all reactors in Japan, the Fukui prefectural government in November 2011 came up with a new tax plan to collect revenues from reactors that were not in operation.

The electricity generating capacity of the reactor was used as the standard for calculating the new tax.

The tax plan spread to 12 prefectures. Miyagi Prefecture was the last, and it started taxing the Onagawa nuclear based on its capacity in June.

The prefectural governments are expected to collect a total of about 15 billion yen annually from this tax.

Fukui Prefecture, which hosts the largest number of reactors in Japan, again served as a pioneer among local governments with its move to tax the increasing number of reactors that face decommissioning.

The tax rate was half that for the power capacity tax previously in place, and the prefectures of Saga, Shimane and Ehime are now taxing reactors being decommissioned.

Electric power companies that operate the nuclear plants pay the local taxes on their reactors from electric bills charged to customers.

To impose such taxes, the local governments must consult with the electric power companies before obtaining the approval of the Ministry of Internal Affairs and Communications.

The process has been criticized because it does not give a voice to those who either benefit or shoulder a financial burden from the additional tax.

(This article was written by Norihiko Kuwabara and Takufumi Yoshida.)