Govt, Ruling Bloc Plan to Reconsider When to Begin Tax Hike for Defense; Issue Will be Discussed Next Year

The Yomiuri Shimbun

13:48 JST, December 14, 2024

The government and the ruling parties decided on Friday to postpone making a decision on when to raise income tax rates to secure funds needed to strengthen the nation’s defense capabilities.

The government, the Liberal Democratic Party and its junior coalition partner Komeito initially planned to raise rates starting in January 2027, but after discussions between the two parties, they decided they will instead “continue to consider” the timing.

However, the possibility of beginning the tax increase in January 2027 has not been eliminated. They plan to discuss the matter again at next year’s meeting of the Tax Commission.

The LDP’s Research Commission on the Tax System presented its revised proposals at a meeting on the same day. The commission’s chairperson Yoichi Miyazawa said after the meeting: “We will decide on when to raise the income tax rate next year or later. There are all kinds of possibilities.”

They agreed to postpone deciding when to raise the income tax rate because Komeito was reluctant to make that decision at a time when the ruling parties and the Democratic Party for the People have been discussing tax cuts, including raising the “¥1.03 million annual income barrier.”

Miyazawa said that Komeito had a point. Komeito Secretary General Makoto Nishida praised the postponement, saying, “It is right not to raise taxes while sending a message about cutting taxes.”