Japanese Tax Commission To Scrap Tax Breaks For The Elderly

by Mary Swire, Tax-News.com, Hong Kong

13 December 2001

The Japanese Government Tax Commission announced on Tuesday that it has decided to scrap a range of tax breaks for the elderly as part of a sweeping process of tax reform.

Under the 'maruyu' scheme currently in place, Japanese citizens aged 65 or over are exempted from a 20% tax on interest and yields from bank deposits, postal savings, and public bonds up to a total of 10.5 million yen. However, the government has said repeatedly that it would like to encourage the population to employ their money more actively in an attempt to boost the country's stock market. It is hoped that this latest move will encourage the elderly to channel more of their savings into stocks and other financial instruments.

Separately, the tax panel has also announced that it is likely to propose a surtax on companies in order to compensate for the expected drop in revenue when consolidated or group taxation is introduced, and the Finance Minister, Masajuro Shiokawa has revealed that he would like to see gift tax rules for homebuyers relaxed.

The government tax panel is scheduled to finalize proposals for tax revisions in the 2002/03 fiscal year on Friday.

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