Local governments are increasingly depending on tax revenues from the nuclear plants they host, a relationship that has deepened over the 10 years since the Fukushima nuclear disaster, an analysis by The Asahi Shimbun shows.

That follows the introduction of new tax regimes that ensure a steady flow of nuclear-related tax yields--even when reactors are idle or in the process of being decommissioned. They were brought about largely through increasing existing taxes on nuclear fuels and levying new taxes on spent nuclear fuels kept at the plants.

In fiscal 2011, right after the triple meltdown at the Fukushima No. 1 nuclear power plant, jurisdictions home to nuclear plants and related facilities yielded some 20.1 billion yen ($193.7 million) in taxes. The bulk of that came from taxes on nuclear fuel; many local governments only began collecting spent fuel taxes years after the accident.

But then the figure more than doubled to an estimated 46.7 billion yen in fiscal 2020, ending in March, despite the nuclear plants being offline.

The Asahi Shimbun studied nuclear-related tax revenues received by host municipalities and the 13 prefectures where those municipalities are located.

Local governments can impose taxes on nuclear fuel and spent nuclear fuel at plants and related facilities through approving ordinances to do so.

Of all the jurisdictions examined, Aomori Prefecture, where nuclear fuel cycle facilities are concentrated, and Fukui Prefecture, which hosts 15 reactors, the most in Japan, account for more than 60 percent earned through those taxes.

The amount for fiscal 2020 is larger than the 40.3 billion yen brought in during fiscal 2010, when the plants were operating.

Nuclear fuel taxes were originally based on the value of reactor fuel.
But all the nuclear plants went offline following the Fukushima disaster in March 2011.

As a result, six prefectures housing nuclear plants reported no tax revenues from nuclear fuel taxes in fiscal 2011.

Desperate to secure income sources even during plant closures, Fukui Prefecture introduced in autumn 2011 a new fuel-tax system based on reactor output capacity--meaning the reactors can be taxed even when shut down.

Other jurisdictions home to nuclear plants followed suit.

In 2014, Ehime Prefecture devised a tax on output capacity that can still be applied when the reactor is undergoing decommissioning. Soon after, Saga Prefecture introduced a similar system.

Nuclear plant operators must pay taxes on spent nuclear fuel to the local government as well as to the prefectural government if ordinances requiring the payment were enacted at both levels. 

Ehime and Saga prefectures began taxing spent nuclear fuel in 2019.

Ikata, home to the Ikata nuclear plant in Ehime Prefecture, introduced a tax on spent nuclear fuels in fiscal 2018, after Genakai, which hosts the Genkai nuclear plant in Saga Prefecture, did the same in fiscal 2017.

Mutsu, located in Aomori Prefecture, is ready to capitalize on playing host to an interim storage facility for spent nuclear fuel, which is expected to go into operation in fiscal 2021.

The Mutsu city government established new rules in March last year so it can levy tax on spent nuclear fuels. The tax is projected to bring 9.3 billion yen to the city over five years.

Fukui Prefecture introduced a tax regime for nuclear fuels in 1976, ahead of any other local governments with nuclear facilities in the country.

Since then, tax revenues from nuclear fuels and spent fuels brought in by all jurisdictions totaled more than 1 trillion yen through fiscal 2020. And the figure is projected to grow in the years to come.

The driving force behind these local governments expanding their nuclear taxes in new and creative ways is a decline in tax revenues from fixed assets on nuclear facilities, and fewer grants and subsidies coming in from the national coffers to promote nuclear energy.

Many host communities have underlined the need to secure income from hosting nuclear plants, operating or not, to finance new roads and other infrastructure that would be used to evacuate residents in the event of a serious accident.

But a significant number of local governments used tax revenues derived from nuclear plants to cover upkeep of hot spring resorts and other seemingly unrelated facilities, the study shows.

Regional utilities added the amount of taxes on nuclear fuels and spent nuclear fuels they will pay into the electricity rates that consumers paid until 2016, when the retail electricity market became fully liberalized.

Even after the market liberalization, they can do the same to come up with funds to pay nuclear fuel and spent nuclear fuel taxes.

(This article was written by Hideki Muroya and Takuho Shiraki.)