Japan’s ruling Liberal Democratic Party (LDP) tax reform panel has outlined income tax breaks to cushion households from the impact of price hikes, signaling a shift away from a long-standing deflationary mindset. The LDP, led by Prime Minister Fumio Kishida, prioritized tax cuts over defense spending hikes for the next fiscal year, aiming to address public concerns over the rising cost of living and declining real wages. The panel plans to cap annual household income for tax cut eligibility to address wealth disparity concerns. Additionally, the proposal includes tax incentives for companies promoting wage hikes and a new tax scheme to stimulate domestic investment in strategic areas such as electric vehicles and high-tech chips. The ruling coalition is set to incorporate these measures into the fiscal 2024 tax reform framework.
Japan’s Ruling party proposes income tax breaks to alleviate price hike impact.
