Japan’s LDP Agrees To Halve Income Tax Cuts
Japan's ruling Liberal Democratic Party has approved proposals to halve special
income tax reductions implemented in 1999, a senior LDP official has revealed.
"Our plan is to cut the 20% income tax break to 10%, or the value of the
breaks from Y250,000 to Y125,000, starting January 2006," Yuji Tsushima,
the head of the LDP's tax research panel, indicated this week. Tsushima added that the proposals will also cut residential tax breaks to 7.5%
from 15%, or to Y20,000 from Y40,000, starting June 2006. The rest of the tax break will be dissolved when the government considers that
economic conditions have improved sufficiently to do it, Tsushima stated. It is thought the removal of the income and residential tax breaks will raise
some Y3.3 trillion (US$31.2 billion) in revenues for the cash-strapped government. The coalition, which includes the New Komeito, is due to unveil the plans today
as part of the government’s overall plans for tax reform in the next fiscal
year. However, not all members of the coalition are happy about reversing the tax
cuts, which were introduced in 1999 to help pull the economy out of a severe
recession, and many fear the fragile economic recovery could be nipped in the
bud.
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