Ruling bloc adopts tax reform package

December 15, 2017

TOKYO- Japan's ruling coalition adopted an annual tax system reform package on Thursday, featuring a plan to raise income tax for salaried workers earning over 8.5 million yen a year.

The package also seeks to create a new tax in January 2019 to collect 1,000 yen per person from anyone who leaves Japan to secure funds for promoting the country's tourism.

While calling for higher taxes on individuals, the package includes tax incentives for companies raising wages and for small companies.

The reform package will boost tax revenue by some 280 billion yen a year once all listed measures are implemented, including 90 billion yen under income tax reform alone.

Higher income tax will be imposed on some 2.3 million people, about 4 pct of overall salaried workers in Japan, starting in January 2020.

But salaried workers who have children aged 22 or younger as well as those with family members in need of nursing care will be exempt from the tax increase. Income tax on self-employed individuals and freelance workers will be cut.

Under the income tax reform, the amount of the basic deduction that is applied to all taxpayers will be raised by 100,000 yen from the current 380,000 yen, while the amount of the additional deduction for salaried workers will be cut by 100,000 yen.

The amount of the maximum income deduction will be lowered to 1.95 million yen from the current 2.2 million yen.

The basic income deduction for people earning over 24 million yen a year will be scaled down, and the amount will be reduced to zero for those getting over 25 million yen.

The amount of deduction for public pension recipients will be reduced by up to 200,000 yen for those with additional income of over 10 million yen.

In the reform package, the ruling Liberal Democratic Party and its coalition partner, Komeito, said they will continue reviewing the income tax in a bid to improve the function of income redistribution. Jiji Press