Economy Japanese government mulls 40,000 JPY income tax cut

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.

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