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Work reforms feature in Japan tax proposals

  • August 27, 2016
  • , Nikkei Asian Review , 6:45 a.m.
  • English Press

TOKYO — Japanese government ministries have proposed tax code changes for next fiscal year to encourage women and seniors to work, aiming to shore up economic growth as the population shrinks.


Japan’s working-age population, or the number of people ages 15-64, is dwindling by about 1 million each year. Prime Minister Shinzo Abe has repeatedly promised to make it easier for people to balance work with child-rearing or caring for infirm loved ones.


To help women into the work force, the government aims to increase capacity at taxpayer-supported child-care facilities by 500,000 slots. But expansion has not kept pace with demand. The waiting list has grown for two straight years, reaching roughly 23,600 children nationwide in April.


The Ministry of Health, Labor and Welfare and the Cabinet Office will seek tax credits for households who hire baby sitters or use unlicensed child-care centers. The high cost of these two options means that many people who cannot get their children into taxpayer-supported facilities simply give up on work. Another proposal would exempt child-care centers offered by companies for their employees from certain local taxes.


The Ministry of Economy, Trade and Industry will ask for a tax break to encourage wage hikes as part of the government’s drive to ensure equal pay for part-timers, temps and “non-regular” workers who perform the same work as full-fledged employees. Companies currently receive a tax credit for 10% of total pay increases, and the ministry proposes raising this credit to 20% for small and midsize enterprises.


Many measures are designed to bolster a slumping economy. The industry ministry seeks to extend a tax break on research and development spending to cover services using information technology. This could include such research topics as improving the efficiency of restaurant staff or analyzing agricultural data. The Ministry of Land, Infrastructure, Transport and Tourism aims to allow duty-free stores in airport arrival areas, letting Japanese travelers buy goods tax-free when they return home.


The industry ministry also will push for steps to promote car buying, such as lowering the annual automobile tax and extending a tax break on environmentally friendly vehicles set to expire at the end of this fiscal year in March. New-vehicle sales fell from a year earlier for a third straight month in July. “At this rate, we won’t be able to produce cars domestically,” a source at a major automaker said.

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