Japan has announced plans to temporarily slash its aviation fuel tax by 80% at most, a move that seeks to help the airline industry, which is struggling with the impact of the global COVID-19 pandemic.
Reuters reports that the nation is considering lowering the tax from $172.58 per kiloliter to $38.32 during fiscal 2021.
Aviation fuels are petroleum-based fuels, or petroleum and synthetic fuel blends, which are used to power aircraft. They have more stringent requirements than fuels used for ground use, for example, heating and road transport. They also contain additives to enhance or maintain properties important to fuel performance or handling.
Meanwhile, this comes at a time when Ratings agency, Fitch, has revised down the outlook on Japan’s long-term foreign currency debt rating to negative from stable, occasioned by the sharp coronavirus-induced domestic economic contraction.
Furthermore, the credit ratings firm affirmed Japan’s rating of A for long-term debt.
The ratings agency projects Japan’s economy to shrink by 5% in 2020, before rebounding to 3.2% growth in 2021. However, the firm still doesn’t expect GDP to return to pre-pandemic levels until the fourth quarter of 2021.
Japan has pushed up its tally of economic measures to combat the virus impact to around $2 trillion, roughly 40% of the size of its economy.
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