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207596
Fri, 09/16/2011 - 17:57
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https://oananews.org//node/207596
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Gov't panel seeks 11.2 tril. yen tax hike for reconstruction
TOKYO, Sept. 16 Kyodo -
The government on Friday firmed up plans to raise around 11.2 trillion yen through individual and corporate income tax hikes to finance reconstruction work following the devastating March 11 earthquake and tsunami, reducing the expected scale of tax increases by tapping other revenue sources.
The government's tax commission reported three tax hike options to Prime Minister Yoshihiko Noda, along with a plan to secure 5 trillion yen in nontax revenues to help fund reconstruction. Noda said the individual income tax hike should remain for 10 years, and rejected an option to raise the sales tax.
The government initially aimed to raise 13 trillion yen through tax hikes earmarked mainly for reconstruction work over a five-year period. But the target amount was reduced to 11 trillion yen as the government now plans to raise reconstruction funds also by selling state-owned shares in Japan Tobacco Inc. and by cutting personnel costs for public servants.
The prime minister's instructions left two options for raising the reduced target of 11.2 trillion primarily through raising personal income and corporate tax rates.
One option calls for a 5.5 percent surtax to be set for personal income tax over 10 years, in special tax surcharge to be add to the corporate tax rate for a three-year period, and an increase in the individual income tax levied by local governments.
The other option involves increases in income, corporate and tobacco taxes, or possibly other indirect taxes. But the individual income surtax would be 4 percent.
The envisioned corporate tax hike is expected to largely offset the impact of the government's decision last December to cut the effective rate of corporate tax by 5 percentage points from the current rate of 40 percent. Some 2.4 trillion yen in revenue is expected over three years from the measure.
If the second option is chosen and the tobacco tax levied by the state and local governments is raised, the commission plans to raise the tax by two yen per cigarette for five or 10 years.
In a related move, the Democratic Party of Japan's tax panel held a plenary meeting the same day to advance discussion within the ruling party, but concerns remain among members that raising taxes now could harm the country's fragile economic recovery.
The DPJ plans to compile the party's own view by the end of this month, and seek to start talks on the matter with opposition parties which dominate the House of Councillors.
The commission also proposed naming the envisioned surtax a special income tax for reconstruction contribution, to highlight taxpayers' broad participation in efforts to rebuild the quake-hit areas.
The government on Friday firmed up plans to raise around 11.2 trillion yen through individual and corporate income tax hikes to finance reconstruction work following the devastating March 11 earthquake and tsunami, reducing the expected scale of tax increases by tapping other revenue sources.
The government's tax commission reported three tax hike options to Prime Minister Yoshihiko Noda, along with a plan to secure 5 trillion yen in nontax revenues to help fund reconstruction. Noda said the individual income tax hike should remain for 10 years, and rejected an option to raise the sales tax.
The government initially aimed to raise 13 trillion yen through tax hikes earmarked mainly for reconstruction work over a five-year period. But the target amount was reduced to 11 trillion yen as the government now plans to raise reconstruction funds also by selling state-owned shares in Japan Tobacco Inc. and by cutting personnel costs for public servants.
The prime minister's instructions left two options for raising the reduced target of 11.2 trillion primarily through raising personal income and corporate tax rates.
One option calls for a 5.5 percent surtax to be set for personal income tax over 10 years, in special tax surcharge to be add to the corporate tax rate for a three-year period, and an increase in the individual income tax levied by local governments.
The other option involves increases in income, corporate and tobacco taxes, or possibly other indirect taxes. But the individual income surtax would be 4 percent.
The envisioned corporate tax hike is expected to largely offset the impact of the government's decision last December to cut the effective rate of corporate tax by 5 percentage points from the current rate of 40 percent. Some 2.4 trillion yen in revenue is expected over three years from the measure.
If the second option is chosen and the tobacco tax levied by the state and local governments is raised, the commission plans to raise the tax by two yen per cigarette for five or 10 years.
In a related move, the Democratic Party of Japan's tax panel held a plenary meeting the same day to advance discussion within the ruling party, but concerns remain among members that raising taxes now could harm the country's fragile economic recovery.
The DPJ plans to compile the party's own view by the end of this month, and seek to start talks on the matter with opposition parties which dominate the House of Councillors.
The commission also proposed naming the envisioned surtax a special income tax for reconstruction contribution, to highlight taxpayers' broad participation in efforts to rebuild the quake-hit areas.
