Two Tokyo Electric Power Co. (TEPCO) affiliates received Fukushima gubernatorial approval for tax breaks designed to help local businesses affected by the Fukushima nuclear disaster, it has been learned.
The firms applied for the local tax exemptions with the Fukushima Prefectural Government. Under the disaster relief tax break system, the amounts exempted are covered by the reconstruction budget. However, in the case of the TEPCO affiliates, it means reconstruction funds will flow to firms associated with the very company that caused the nuclear disaster.
"It is wrong to give them (the TEPCO affiliates) preferential treatment from the standpoint of public sentiment," one critic said.
The two companies are Kandenko Co., an engineering and construction company based in Tokyo's Minato Ward, and Chuo Ward-based Tokyo Energy & Systems Inc., which does maintenance and other work. Both firms have been engaged in projects to decommission the crippled Fukushima No. 1 nuclear plant.
As of March 2016, TEPCO was the biggest shareholder in both firms, with a 46 percent stake in Kandenko and a 24 percent stake in Tokyo Energy & Systems. Six of Kandenko's board members are from TEPCO, while five TEPCO officials were transferred to Tokyo Energy & Systems to become board members. Furthermore, one executive doubles as a board member at both TEPCO and Tokyo Energy & Systems.
The tax-exempt system is based on the Act on Special Measures for the Reconstruction and Revitalization of Fukushima enacted in the wake of the nuclear disaster. The law covers corporations and sole proprietors that had business offices in areas subject to the post-meltdown evacuation orders. Because a small number of local residents are expected to return to their hometowns near the nuclear plant, the system is aimed at attracting people to these municipalities by promoting business activity, including decommissioning work, and securing jobs for them.
Kandenko and Tokyo Energy & Systems both have offices in the region covered by the system. If they make fresh capital investments and apply with the Fukushima Prefectural Government for tax exemptions within five years from the time when evacuation orders were lifted, they will receive a partial corporate enterprise tax exemption, and a 100 percent real estate acquisition tax exemption. Both taxes are prefectural, and exempted amounts are covered by subsidies based on the special tax allocation system for disaster reconstruction funded by a dedicated tax, among other means.
According to a Fukushima Prefectural Government tax affairs department official, 436 corporations and individuals have received written approval for the program, 178 of which have been exempted from paying prefectural taxes totaling 345 million yen. The tax affairs department admitted to issuing approvals to the two TEPCO affiliates, adding, "If applications meet conditions, even TEPCO affiliates are not excluded from access to the system."
A Kandenko spokesperson told the Mainichi Shimbun, "We went through confirmation procedures in line with the intent of the act on special measures. As of this moment, we have received no exemption." Tokyo Energy & Systems built a branch office in an evacuation zone in 2016. Asked whether the company has been granted tax exemptions, a spokesperson said, "We will refrain from replying." A TEPCO spokesperson said, "We are not in a position to comment."