Olivia
19 February, Tokyo: Japan’s ruling Liberal Democratic Party (LDP) has unveiled a proposal to significantly raise the annual income threshold for tax liability, targeting relief for low-income earners. Originally, the proposal aimed to set the limit at ¥1.23 million, but new discussions suggest that the threshold will be increased to over ¥1.5 million for individuals with an annual income of ¥2 million or less.
Currently, the taxable income threshold stands at ¥1.03 million. Under the new proposal, the LDP plans to raise this threshold, making it more accessible for individuals with low income to avoid paying taxes. The proposal will be discussed by the heads of the tax system research commissions of the LDP, Komeito, and the Democratic Party for the People (DPFP) at an upcoming meeting.
The initial proposal by the LDP and Komeito set the threshold at ¥1.23 million. However, a senior LDP official revealed that the updated plan will benefit individuals earning up to ¥2 million annually, with the taxable income threshold raised to more than ¥1.5 million for this group. Additionally, the threshold for individuals earning between ¥2 million and ¥5 million will also see an increase. For those with annual incomes exceeding ¥5 million, the threshold will remain consistent with the original target of ¥1.23 million.
Meanwhile, the DPFP has advocated for a higher threshold, proposing an increase to ¥1.78 million. Some party members are pushing for a more moderate adjustment to ¥1.56 million, aligning it with welfare payment amounts.
In a related development, Komeito Secretary General Makoto Nishida highlighted that the proposed tax changes should also benefit the middle class. This point was emphasized during a meeting between officials from the LDP and Komeito in Tokyo.
As part of broader tax reforms, the government has also agreed to raise the basic and employment income deductions by ¥100,000. These changes are aimed at reducing the tax burden on low-income workers, ensuring a fairer tax system.
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