Debate over raising ¥1.03 mil tax threshold gains steam in Japan

The system is rigged against ordinary working people and biased toward the rich. If you set up your own company, you will only have to pay consumption tax and residence tax. If you report that your company is in the red, you won't have to pay corporation tax.

And if your firm's revenues are less than 10 million yen a year, you won't have to pay the consumption tax, either.

Some analysts, however, argue that the proposal could negatively impact the economy, warning that stimulating private consumption through such a tax reduction could lead to inflation, ultimately squeezing households already struggling with rising prices.'

Yet inflation was what was promoted as the magical holy grail for the past couple of decades by these same ' analysts'.

As the yen has already weakened to historic levels against other major currencies, negatively affecting the country's trade balance, "implementing such a step would be of no use," Kobayashi said, warning higher imports costs could accelerate inflation.

Yes, and the increasing inflation achieved by putting more yen into peoples pockets is what will lead to BOJ raising interest rates , strengthening yen from its current pathetic levels and finally pushing inflation down.

Sakai of Mizuho Research echoed the view, saying, "Consumer spending is feared to slow if households tighten their budgets because of a rise in daily necessity prices such as food and energy bills."

Where has Sakai been for the last couple of years ? But yeah putting more money into peoples pockets will lead to slowing consumer spending according to his genius theory . The BOJ has it wrong ( since they wish for demand led inflation ) and he has it right, slaps forehead ...One wonders which universe Sakai san lives in.

If tax reduction steps are implemented in fiscal 2025, it would be difficult for the government to achieve its goal of a surplus in the primary balance in that year

Don't take the current affluence for granted. Japan is just spinning plates. It won't be able to keep printing yen forever.

Don't take the current affluence for granted

What affluence? Japan is rapidly becoming a third world country. The visible poverty in some parts of Tokyo is truly shocking.

What a big fake and extreme lie! They officially tax my very much lower income at a 10.21% rate, every time.

I can't help thinking the impoverishment of the Japanese people is a deliberate government policy. The LDP doesn't want the plebs to travel abroad because they will realize what the Living Dead Party has done to this country. It's truly shameful.

Lost in all the noise is the FACT that depending upon the insurance the person holds and age of the person, it is legal to earn up to 1.8 million yen per year, or 155,000 per month NOW.

This is an easy one to do, and much needed for all age categories!

Nicely said, Burgerland

the government estimates that the proposal would cause state and local tax revenues to drop by between 7 trillion yen and 8 trillion yen per year.

Double or triple the price of a pack of cigarettes. The increase being taxes.

Morita has several part-time jobs, including working as a teacher at a cram school and as a convenience store clerk. By the end of November, her earnings this year stood at around 900,000 yen.

But Morita, 20, hopes to work, and earn, more, to pursue her dream of engaging in volunteer activities abroad to demonstrate traditional dance and other aspects of Japanese culture, having made trips so far to Vietnam and Spain.

Japan still have plenty optimistic healthy and young people that want to be more productive, at the end just Japan's rule and custom that really become obstacle to reach their goal. And also many business suffering because they can't find part timer because many of their part timer can't go above 1.06 million salary.

So who really creating this problem?

has long remained reluctant to review the threshold for fear of a possible decline in tax revenue.

Clearly this makes for good politics for the DPP. But some facts may be helpful.

This isn't about the tax rate low earners actually pay. It is about the tax deduction the parents of low earners can claim, and that matters only when they actually earn a lot. So why should we care?

Someone earning below 1m still pays 5% income tax and 10% residence tax. It's usually withheld and paid by the employer. There is no proposal to change the threshhold or rates.

Meanwhile their rich parent may save 200,000-300,000 Yen in taxes, and pocket these gains. And this is now supposed to become 300,000-400,000.

Go figure... Just DPP politics, fooling the poor to gain the rich.

Syria, South Korea, maybe Japan is next? The LDP's corruption and incompetence has reached intolerable levels. But most people here are too brainwashed to realize they are being fxxxed over sideways -- it's a pathetic situation.

@Burgerland

Yet inflation was what was promoted as the magical holy grail…

A different kind of inflation, not the kind we are getting now. There are two types: cost push, which is what we are getting now due to such things as higher prices for imported food and energy, etc.; and demand led, which is caused by increased consumer spending and other healthy economic activity. The BOJ wants more of the latter and less of the former.

@Roger

Japan is just spinning plates. It won't be able to keep printing yen forever.

And yet it has -- for nearly a quarter of a century.

""However, the government estimates that the proposal would cause state and local tax revenues to drop by between 7 trillion yen and 8 trillion yen per year.""

No problem, just reduce their BONUSES.

Lost in this analysis, increasing incentive to work MORE results in added economic activity, especially spending by primarily young or old people in this tax category who need more pocket money, given ongoing and elevated inflation. Spending = MORE sales and income taxes!

I suspect the article is not giving the full picture. It's talking about dependents, which means spouses and university aged children only (high school kids won't earn enough), but I've seen other articles where it takes about the tax free allowance going up for everyone.

If you are a dependent on a much higher earner (mostly likely your husband or father), the loss of his deduction will be much bigger than any amount of income tax you pay yourself. This could be remedied by raising the level at which the "my child/wife is a dependent" deduction ends, without bothering about the salary at which that dependent (and everyone else) starts paying income tax.

By raising the tax free allowance for everyone, which most other articles about this policy have said, you give a tax cut that benefits high earners the most. Many politicians across the country say the lost of tax revenue risks social programs, which benefit the poorest most.

Japan seems to be happy with its kleptocracy, but for how long?

There are two types: cost push, which is what we are getting now due to such things as higher prices for imported food and energy, etc.; and demand led, which is caused by increased consumer spending and other healthy economic activity. The BOJ wants more of the latter and less of the former.'

Indeed. Hence putting more money into people,s pockets hopefully leading to increased demand and possibly lifting the demand side led inflation is precisely what BOJ is after. If they increase interests rates as a result leading to strengthening of the yen / lowering the cost of imports, bingo!

What affluence? Japan is rapidly becoming a third world country. The visible poverty in some parts of Tokyo is truly shocking

Downvoted by the lucky residents of Minato-ku, I assume. It's grim everywhere else these days.

Come on guys, income tax is taxed at a marginal rate. Make sense to you to decide to not work for the rest of the year over 80 cents on the dollar versus 90 cents on the dollar? Sure the choice is yours but clearly you don't have any ambition or responsibility to put food on the table.

This "debate" among 3 parties is like farce to distract public eyes from fundamental causes.

Education budget that Japanese LDP government had spent is reducing to lowest level among OECD during past decades, Besides, full-time workers' real wages are gradually decreasing by economical misstep, it's increasing students who cannot but working longer year by year.

But LDP regime and DPP have no intention to solve such fundamental causes.

When should students learn about the real world? Tax free to help students. How about tax free to help adults. University students in Japan drink and gamble extensively and it’s a time to party (generally) I don’t see most of any benefit for students. How about reducing sales taxes. Make food in super markets tax free as food is a right. And go from there.

What most don't realize, it's not just Yen that's lost purchasing power. It's all currencies, including US$.

US$ buys about 1/3 as much Real Assets as less than five years ago, using any diversified commodities index to include metals, food, energy, timber, etc. Yen lost about 66% of its value against $ in same time period.

Thus, Yen now buys 5X LESS Real Assets vs. less than 5 yrs ago. WHY Japan's people & companies are POOR.

Making matters worse, any pure Yen financial asset, like Bonds, have lost SAME REAL ASSET purchasing power.

Above=Why Japan's Govt. Tax Relief for Poor is Needed

Turns out world at war destroys value of ALL Currencies and makes countries heavily reliant on financial (not real) assets very poor. Thus, Tax relief for Poor is NEEDED.

And if your firm's revenues are less than 10 million yen a year, you won't have to pay the consumption tax, either.

Unless you’re an independent contractor working for Gaba.

Double or triple the price of a pack of cigarettes. The increase being taxes.

They should add more tax to alcohol along with it.