Economy Japanese government mulls 40,000 JPY income tax cut

[thomas]

Yay, more money is flooding in. But it won't fix anything... the government is considering an income tax cut of 40,000 JPY (USD 268) per person and cash handouts of 70,000 JPY to low-income and elderly households as part of temporary inflation-relief measures. The tax break will apply to each dependent, meaning 160,000 yen would be cut from the income tax of a taxpayer with three dependent family members. The income tax break will be financed by the increased income tax revenues in fiscal 2021 and 2022.

Overall, the tax cut and cash assistance are expected to cost around 5 trillion yen, or $33.4 billion. "Low earners are suffering heavily from rising prices, and we need to respond to the situation speedily," Kishida said Tuesday. "I want to return part of the government's increased tax receipts from the last two years under COVID-19 in a way that is clear to the people," he said. Japan's income tax receipts have grown as wages have risen in recent years, going from 19.1 trillion yen in fiscal 2020 to 21.3 trillion in fiscal 2021 and 22.5 trillion yen in fiscal 2022. This roughly 3.4 trillion yen increase will be used to fund the proposed tax cut. The government and the LDP are looking to reduce taxes by a fixed monetary amount, instead of by a certain percentage, since the latter option would be more beneficial for high earners. Japan last implemented a fixed-amount cut in 1998, during the Asian financial crisis.

40,000 yen to be given out in tax cuts to help deal with rising prices | The Asahi Shimbun: Breaking News, Japan News and Analysis

Government floats ¥40,000 income tax cut to ease inflation pain

Households would start feeling the benefits around next summer at the earliest.

www.japantimes.co.jp

Paywall alert:

Japan weighs one-time $260 tax cut to ease inflation's pain

With cash assistance, relief package seen totaling $33bn

asia.nikkei.com