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ECONOMY > Economic Policy

Japan’s ruling party eyes revamped tax break for couples

  • August 30, 2016
  • , Nikkei Asian Review , 4:57 a.m.
  • English Press

TOKYO — Japan will consider reworking a spousal tax deduction benefiting households with a single breadwinner as part of next fiscal year’s tax reform package, the head of the ruling party’s tax panel told The Nikkei.

 

If one spouse makes 1.03 million yen ($10,100) or less a year, the other can claim a 380,000 yen deduction on top of the standard personal exemption. The measure, which applied to 7.2 million households in 2014, dates back to 1961, when husbands typically worked and wives stayed at home.

 

“More than 20 years have passed since the last big reform, and the world has changed a lot since then,” Yoichi Miyazawa said Monday. But the Liberal Democratic Party lawmaker stressed that the government must also give due consideration to women’s role in the household.

 

The break makes many housewives think twice about fully entering the working world, critics argue. Yet the government has avoided shrinking or scrapping the deduction, fearing a backlash from affected households whose taxes would go up.

 

But Japan now needs incentives to encourage women to work, Miyazawa said. One proposal would replace the existing deduction with a single break for married couples that applies regardless of whether one or both spouses work.

 

Ways to take income into account “will probably also be discussed,” Miyazawa said. Limiting deductions available to higher-income households while offering more generous breaks to those less well-off would soften the blow for the latter.

 

The government will work on a proposal to include in the reform outline due out at the end of the year. But it could run into opposition in the ruling coalition, where many worry that an effective tax hike on single-income married households would dent their electoral prospects.

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