Economy Japan weighs 2027 income tax rise to help fund defence buildup

thomas · 5 Dec 2025

Ouch!

To cover a planned increase in defence spending, the LDP, under PM Takaichi, is considering raising income tax from January 2027 through a special income tax earmarked specifically for defence costs. Long before Takaichi took office in October, the government had already committed to spending 43 trillion yen over the five years to March 2028 in response to what it sees as rising security risks. Part of that increase is supposed to be financed through higher corporate, tobacco and income taxes, but the government has not yet settled on when the income tax rise would take effect—an unresolved issue made more sensitive by the ongoing squeeze on household budgets from inflation.

The plan under discussion within the LDP would raise the income tax so it would translate into upwards of 200 billion yen in added revenue, according to the sources. A special income tax levied to finance rebuilding projects after the 2011 tsunami and nuclear disaster would also be reduced in an apparent effort to soften the expected blow to taxpayers. But given that the temporary disaster-related income tax would then be extended to bring in the same amount of revenue overall, the envisioned defense-use income tax would still represent an added burden for households in the long term. Before entering a coalition arrangement with the Takaichi-led LDP, the formerly opposition Japan Innovation Party was against tax hikes to pay for increased defense-related spending. The corporate and tobacco taxes will be raised beginning next April, with an additional levy of 4 percent of the amount paid in corporate taxes. The tobacco tax hike will start with higher levies on vaping products.

Japan mulls income tax hike in 2027 to cover increase in defense spending - The Mainichi

TOKYO (Kyodo) -- Japan's ruling party, led by Prime Minister Sanae Takaichi, is considering raising the country's income tax in January 2027 to cover

mainichi.jp

Economy Japan weighs 2027 income tax rise to help fund defence buildup

thomas

Unswerving cyclist

Japan mulls income tax hike in 2027 to cover increase in defense spending - The Mainichi

Similar threads