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Japan traditionally constructed highways through highway public corporations, but these corporations incurred huge amounts of debt over the years.  In 2005, four highway public corporations were dissolved and the Japan Expressways Holding and Debt Repayment Agency (JEHDRA) and six new highway companies were established.  JEHDRA took over the highway assets and debts of four former highway public corporations and leased highways to the highway companies.

Previously, the major source of government funding for highway construction was earmarked tax revenues, such as the gasoline tax and car-related taxes.  The toll from highway users was used to pay off loans.  However, the earmarked tax revenue system for road construction was abolished in 2008.

The government supports JEHDRA, and JEHDRA in turn provides financing to highway companies through grants and debt guarantees.  The government constructs and manages those highways that are not profitable by themselves.

I. Highway Construction System

Public road planning, including for highways, is under the jurisdiction of the Ministry of Land, Infrastructure and Transportation (MLIT).[1]  The Cabinet determines the routes for “high-standard arterial roads” (highways) in the context of nationwide land planning.[2]  The current routes were set in 2008 by the Grand Design of Land in the 21st Century.[3]  There are two categories of highways: national expressways and national highways with access control.[4] 

A.  National Expressways

Routes of national expressways were designated by the Act on Construction of Arterial Roads for Land Development.[5]  The MLIT develops the basic plan for a route that is to be constructed upon consultation with the Committee on Construction of Arterial Roads for Land Development,[6] which was established under the jurisdiction of the MLIT.[7]  Committee members consist of members of the Diet (Japan’s parliament) and scholars.[8]  The MLIT then plans the construction upon consultation with the Committee and relevant prefectures.[9]

1. Former Highway Companies

The construction and maintenance of highways may be managed by designated highway corporations.[10]  In fact, national expressways were mainly managed by highway public corporations until 2004.[11]  In 1956, the first law to establish a highway public corporation was enacted[12] and the Japan Highway Public Corporation (JH) was founded.[13]  The toll-road system was introduced in 1952[14] to cover a part of highway maintenance costs and repay construction loans.[15]  The JH and three other highway public corporations that were founded later collected tolls from users.[16]  In 1970, the Local Road Public Corporation Act was enacted and local road public corporations commenced toll-road management.[17]

There were four main financial sources for national expressway construction: “toll revenues, highway bonds, loans from banks, and government subsidies and social capital fund[s].”[18]  However, highway public corporations accumulated huge debts over the years.  Those debts and other problems lead to the privatization of these public corporations in the early 2000s.[19]  According to experts who analyzed the JH’s debt, the two main costs that the JH incurred—the highway construction costs and the corporation’s management costs—were financed by three sources: highway bonds, loans from banks, and government investments.  The principal and interest for such debts were repaid by toll revenues and government subsidies.  Because the JH constructed more highways than its repaying ability could cover, its debts become larger.[20] 

In 2002, the Cabinet established the Promotion Committee for the Privatization of the Four Highway-related Public Corporations (Promotion Committee) to examine “new organizational modalities” premised on privatizing JH and other highway public corporations and “ways to ensure [their] economic viability.”[21]  The Promotion Committee submitted its comments to the Cabinet near the end of 2002.[22]  The MLIT discussed the privatization proposal for a year, taking the comments into consideration.  Then, the Cabinet made a final decision and submitted bills to the Diet during the 2004 ordinary session.[23]  The Diet passed the bills and, as a result of the legislation, four highway public corporations were dissolved and the Japan Expressways Holding and Debt Repayment Agency (JEHDRA) and six highway companies were established in 2005.[24]  

JEHDRA, an incorporated administrative organization, took over the highway assets and debts of four former highway public corporations.[25]  JEHDRA repays such debts and also pays incremental debts due to new highway construction by collecting highway fees from the six companies.  The six highway companies construct and manage highways, and collect tolls.  “The lease fees that the companies pay to JEHDRA are variable depending on the level of traffic.  The revenue risk is hence transferred from the companies to JEHDRA and ultimately to the Japanese government which is JEHDRA’s owner.”[26]  In addition, JEHDRA holds the interest rate risk when the interest rate of the loans is variable under this system.[27]  JEHDRA plans to repay the debts of the former public corporations within forty-five years.  After finishing repayment, JEHDRA will be dissolved.[28] 

2. Direct Construction by National Government

During the discussion of the privatization of public highway corporations, the Promotion Committee recommended that, “[t]o handle investments for construction that are unprofitable for new companies, the Government . . . establish a new system based on sharing of cost burden with central and local governments under the formula of joint implementation.”[29]  The government decided that it would directly manage some highways that were difficult to make profitable, but nonetheless important.  Such highways have been financed by national and local governments and are free of tolls.[30]

B. National Highways with Access Control

National expressways are a critical part of Japan’s national road traffic network.  On the other hand, national highways with access control facilitate the smooth flow of traffic, although some of them function almost the same as national expressways.[31]  Of the 14,000 km of arterial high-standard highways formulated in the Arterial High-standard Highway Network Plan in 1987, 2,480 km consist of access-controlled national highways,[32] which are managed by the national government.[33]

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II. Funding

A.  Funding System

JEHDRA borrows money from financial institutions and issues bonds upon the approval of the MLIT.[34]  The government may guarantee bonds.[35]  JEHDRA also issues Fiscal Investment and Loan Program (FILP) bonds.[36]  When JEHDRA provides companies with interest-free loans, those loans are funded by government subsidies.[37]

In the case of national expressways that are directly managed by the MLIT, the national government pays three-quarters of the construction costs, and relevant prefectures pay the remaining one-quarter.  Maintenance costs are paid entirely by the national government.[38] 

In the case of national highways with access control, the national government pays two-thirds of the construction costs, and relevant prefectures pay the remaining one-third.[39]  Again, the national government pays for all maintenance costs.[40]

B.  Tolls

The Japanese expressway system consists mostly of toll roads.  The system was originally intended to become toll free as soon as the national expressway network was completed and construction debts repaid.[41]  However, this did not work as planned.

The highway companies pay JEHDRA the lease fees[42] out of their income from tolls, excluding costs for expressway maintenance and management, and JEHDRA uses these funds to repay debts.[43]

Tolls are expensive in Japan.  “Japan’s tolls average ¥24.6 per km [about US$0.38 per mile], compared with the equivalent of ¥10.8 to ¥13.45 per km in France and ¥7.01 in Italy,”[44] with the 315.4-km (196-mile) journey from Tokyo to Nagoya on the Tōmei Expressway costing 6,900 yen (about US$69) in tolls for an ordinary car.  Discounts are available at night and during holidays.[45]  With a few exceptions, tolls on national expressways are based on distance traveled.

C.  Earmarked (Special Purpose) Taxation

In order to develop the road network, large-scale and stable funding is required.  The major source of funding for highway construction in Japan was previously the earmarked tax-revenue system, which appropriated gasoline and car-related taxes.[46]  The government established a special fund for financing roads in 1953.[47]  After that, fuel taxes and other vehicle-related taxes have been earmarked for road works.  The gasoline tax was established in 1954 as an earmarked tax to be sent to the special fund.[48]  The following earmarked taxes were then added to the system: a local gasoline tax in 1955,[49] a diesel fuel transaction tax in 1956,[50] a liquefied petroleum gas tax in 1966,[51] an automobile acquisition tax in 1968,[52] and a motor vehicle tonnage tax in 1971.[53]  In 1958, the special account for road construction was established, replacing the special fund.[54]

When a manufacturer of gasoline transfers gasoline from the manufacturing location, it must pay gasoline tax.  A person who receives imported gasoline from a customs bonded area must also be required to pay gasoline tax.[55]  The tax rate is 48,600 yen (about US$486) per one kiloliter.[56]  The local gasoline tax is imposed in a similar fashion.  The tax rate is 5,200 yen (about US$52) per kiloliter.[57]  The diesel fuel transaction tax is imposed on consumers.  Manufacturers, importers, or wholesale companies add a tax on the price and pay it to the local government.[58]  The tax rate is 15,000 yen (about US$150) per kiloliter.[59]  The liquefied petroleum gas tax is imposed on gasoline station operators.[60]  The tax rate is 17.5 yen (about US$0.18) per 1 kilogram of liquefied petroleum gas.[61]  The gasoline tax and the liquefied petroleum gas tax are considered to fit the benefit principle because the amounts of the taxes are proportional to driving distances.[62]

A prefectural automobile acquisition tax is paid by persons when they acquire a car.[63]  The tax rate is 5% of the purchase price for nonbusiness use, and 3% for business use.[64]  When the consumption tax is raised from 5% to 8% in April 2014, the tax rate for qualified fuel-efficient cars will be reduced from 5% to 3% for automobiles used for nonbusiness purposes and from 3% to 2% for automobiles used for business.[65]  When the consumption tax rate is raised from 8% to 10% (planned in October 2015), this tax will be abolished.[66]  A national motor vehicle tonnage tax is paid by vehicle owners at the time of registration and mandatory inspections.[67]  In the case of a new passenger car for nonbusiness use, the tax amount is 12,300 yen (about US$123) per 500 kilograms (1,102 pounds).  For example, the weight of a Toyota Corolla is about 1,400 kilograms.[68]  Therefore, a motor vehicle tonnage tax of 36,900 yen (about US$369) is imposed when the buyer of the new car registers it.  In the case of a Lexus LS, which weighs around 2,000 kilograms,[69] the buyer would pay 49,200 yen (about US$492) or 61,500 yen (about US$615), depending on the model.  After three years from the date a new car is registered, a vehicle inspection is mandated every two years.  Up to the fifth inspection, the owner of a car must pay 8,200 yen (about US$82) per 500 kilograms of the vehicle weight.  The tax rate is higher for older cars.  The tax is reduced if a car meets ecofriendly standards.[70]  

The Japanese government began reviewing this special-purpose tax system in 2005.  At the end of 2008, the government decided to abolish the special purpose tax system, and all tax revenues listed above have now been incorporated into the general account as of fiscal year 2009.[71]

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Sayuri Umeda
Foreign Law Specialist
March 2014


[1] Dōro hō [Road Law], Act No. 180 of 1952, amended by Act No. 30 of 2013, art. 12.

[2] Kokudo keisei keikaku hō [National Spatial Planning Act], Act No. 205 of 1950, amended by Act No. 89 of 2005, art. 2, para. 1, item 6; Kokudo kaihatsu kansen jidōshadō kensetsu hō [Act on Construction of Arterial Roads for Land Development], Act No. 68 of 1957, last amended by Act No. 160 of 1999, art. 3 & attached table. 

[3] The 5th Comprehensive National Development Plan, Grand Design for the 21st Century, Cabinet Decision (Mar. 31, 1998),

[4] Road Law arts. 3, 3-2 & 48-2.  See also MLIT, Expressways in Japan, Presentation, at 4, (last visited Jan. 27, 2014).

[5] Act on Construction of Arterial Roads for Land Development art. 3 & attached table.

[6] Id. art. 5, para. 1.

[7] Id. art. 11.

[8] Id. art. 13.

[9] Kōsoku jidōsha kokudō hō [National Highway Act], Act No. 79 of 1957, amended by Act No. 76 of 2013, art. 5.

[10] Dōro seibi tokubetsu sochi hō [Special Act on Road Construction and Maintenance], Act No. 7 of 1956, last amended by Act No. 101 of 2004, art. 3.

[11] Special Act on Road Construction and Maintenance, Act No. 7 of 1956, art. 2-2, as amended by Act No. 80 of 1957.

[12] Nihon dōro kōdan hō [Japan Highway Public Corporation Act], Act No. 6 of 1956.

[13] Welcome to JH, Japan Highway Public Corporation (JH), 236639/ (Jan. 1, 2005).  The website was archived by the National Diet Library of Japan.

[14] Dōro seibi tokubetsu sochi hō [Special Act on Road Construction and Maintenance], Act No. 169 of 1952, art. 3.  This Act was abolished by the Act of the same name referenced in note 10.

[15] Takaaki Nambu, Roads Fund Board, United Republic of Tanzania, Histry [sic] of Road Development, Finance and Investment in Japan, at 8,
(last visited Jan. 3, 2014).

[16] Id.

[17] Chihō dōro kōsha hō [Local Road Public Corporation Act], Act No. 82 of 1970.

[18] Fumitoshi Mizutani & Shuji Uranishi, Privatization of the Japan Highway Public Corporation: Policy Assessment, Paper for the 46th Congress for the European Regional Science Association, at 11 (2006),

[19] Id. at 14.

[20] Id. at 11.

[21] Promotion Committee for the Privatization of the Four Highway-related Public Corporations, Prime Minister of Japan and His Cabinet, (last visited Jan. 21, 2014).

[22] Promotion Committee for the Privatization of the Four Highway-related Public Corporations, Comments (summary) (Dec. 6, 2002), (copy and paste URL into browser).

[23] Nobuhiro Yamagoshi, Doro kankei yon kodan mineika no kensho [Examination of Privatization of Four Public Corporations Relating to Roads], Rippō to chōsa No. 260, at 35, 37–38 (Oct. 2006),

[24] President’s Message, JEHDRA (Sept. 2013),

[25] Dokuritsu gyōsei hōjin nihon kōsoku dōro hoyū·saimu hensai kikō hō [Japan Expressways Holding and Debt Repayment Agency Act], Act No. 100 of 2004, last amended by Act No. 66 of 2006, art. 12.

[26] José Manuel Vassallo, Executive Report: Analysis of the Japanese Toll Expressway System in the Framework of the Current Trend of the Toll Road Business in the World 133 (Nov. 2008),

[27] Id.

[28] Gyōmu no gaiyō [Summary of Our Business], JEHDRA, (last visited Jan. 7, 2014).

[29] Promotion Committee, supra note 22, at 2-3.

[30] MLIT, Kōsoku jidōsha kokudō no hyōka kekka ni tsuite [Regarding Evaluation Results of National Expressways] 1, (last visited Jan. 17, 2014).  National Highway Act and Okinawa Promotion Special Measures Act Amendment, Act No. 36 of 2003.

[31] MLIT, Maintenance Standards of General National Roads and National Expressways that the National Government Manages (Draft) 1, (in Japanese).

[32] MLIT Presentation, supra note 4, at 4.

[33] Road Law, Act No. 180 of 1952, amended by Act No. 30 of 2013, art. 12.

[34] JEHDRA Act, Act No. 100 of 2004, art. 22, para. 1.

[35] Id. art. 23.

[36] The funds for FILP bonds are “procured through the government bond issuance supply resources to Fiscal Loans of the Fiscal Loan Fund and their principal and interest repayment is covered by returns from these loans, while ordinary government bonds supply resources to expenditures of the General Account and their repayment is covered by taxation etc.”  How Do FILP Bonds Differ from Government Bonds?, Ministry of Finance, (last visited Jan. 13, 2014).

[37] JEHDRA Act, Act No. 100 of 2004, last amended by Act No. 66 of 2006, art. 12, paras. 4–6 & art. 25.

[38] National Highway Act art. 20, para. 1.

[39] Road Law, Act No. 180 of 1952, amended by Act No. 30 of 2013, art. 50, para. 1.

[40] Road Law art. 49.

[41] Mizutani & Uranishi, supra note 18, at 2.

[42] JEHDRA Act, Act No. 100 of 2004, art. 16. 

[43] Id. art. 13; see also Vassallo, supra note 26, at 133.

[44] Kazuaki Nagata, A Highway System that Ever Exacts Toll, Japan Times (Dec. 16, 2008),   See also MLIT, Changes of Highway Pricing System in Other Countries, Hand-out at the 9th Meeting of Experts Committee on Highway System 3 (Aug. 22, 2011), (in Japanese).  

[45] Tsūkō ryōkin sisutemu [Toll System], Central Nippon Expressway Company Limited, (in Japanese; last visited Jan 21, 2014).

[46] Nambu, supra note 15, at 6.

[47] Temporary Special Measures Act on Financial Source of Road Construction, Act No. 73 of 1953.

[48] Id. art. 3.

[49] Local Gasoline Tax Act, Act No. 104 of 1955, amended by Act No. 114 of 2011.

[50] Local Tax Act Amendment, Act No. 81 of 1956, art. 700.

[51] Liquefied Petroleum Gas Tax Act, Act No. 156 of 1965.

[52] Local Tax Act Amendment, Act No. 4 of 1968.

[53] Motor Vehicle Tonnage Tax Act, Act No. 89 of 1971.

[54] Dōro seibi tokubetsu kaikei hō [Act on Special Account for Road Construction], Act No. 35 of 1958.

[55] Gasoline Tax Act, Act No. 55 of 1957, art. 3.

[56] Id. art. 9; Tax Special Measures Act, Act No. 26 of 1957, amended by Act No. 45 of 2013 art. 88-8.

[57] Local Gasoline Tax Act, Act No. 104 of 1955, amended by Act No. 114 of 2011, art. 4; Tax Special Measures Act art. 88-8.

[58] Local Tax Act, Act No. 226 of 1950, amended by Act No. 63 of 2013, art. 144-2; see also Keiyu Torihiki Zei [Diesel Fuel Transaction Tax], Bureau of Taxation, Tokyo Metropolitan Government, (last visited Jan. 14, 2014).

[59] Local Tax Act art. 144-10.

[60] Liquefied Petroleum Gas Tax Act art. 4.

[61] Id. art. 10.

[62] Nambu, supra note 15, at 5.

[63] Local Tax Act art. 118.

[64] Id. art. 119; Supplemental Provisions art. 12-2-3.

[65] Liberal Democratic Party & Komei Party, Summary of Tax Reform in Fiscal Year 2014 at 97 (Dec. 12, 2013), (in Japanese).

[66] Id. at 4.

[67] Motor Vehicle Tonnage Tax Act, Act No. 89 of 1971, amended by Act No. 53 of 2013, art. 4.

[68] Corolla Fielder Specification, Toyota, (last visited Jan. 16, 2014).

[69] Specification LS460/LS460L, Lexus, (last visited Jan. 16, 2014).

[70] Motor Vehicle Tonnage Act art. 7; Tax Special Measures Act, Act No. 26 of 1957, amended by Act No. 45 of 2013 arts. 90-11, 90-11-2 & 90-12.  See also Jidosha juryo zei [Motor Vehicle Tonnage Tax], Shaken to kuruma no tetuduki annai senta [Car Inspection and Other Car Procedures Guidance Center], District Transport Sub-Bureau, (last visited Jan. 16, 2014).

[71] Doro tokutei zaigen no ippan zaigenka ni tsuite [Regarding Making Road-Specific Revenue Source Into General Revenue Source], MLIT, (last visited Jan. 16, 2014).

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Last Updated: 06/09/2015