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ECONOMY > Economic Policy

LDP embarks on discussions on reviewing spousal tax deduction

  • November 17, 2016
  • , Nikkei , p. 5
  • JMH Translation

On Nov. 16, the Liberal Democratic Party’s Research Commission on the Tax System entered full discussions on raising the annual income ceiling for eligibility for a spousal tax deduction from 1.03 million yen to make it easier for housewives to continue their part-time jobs even though their income exceeds this threshold. It will consider a proposal from the Ministry of Finance to raise it to 1.5 million yen. Plans are underway to source the expansion of the tax credit by limiting well-to-do households’ eligibility for the credit. If housewives working part time will become eligible for a larger tax deduction, the number of higher-income households who shoulder a heavier tax will grow.

 

The expansion of a tax break for housewives with part-time jobs is aimed at reviewing the “1.03 million yen” threshold and encouraging them to work longer hours. MOF wants to maintain the same level of tax revenue after the revision. This means that a larger tax credit for housewives with part-time jobs will lead to a tax increase. 

 

The LDP is working to increase the annual income ceiling eligible for the tax deduction to 1.3 to 2 million yen, but discussions center on the “1.5 million yen or less” proposal, which will give housewives an income deduction of 380,000 yen, the same amount as the spousal tax deduction. Under this scenario, the party will consider limiting the eligibility for the spousal tax deduction in the case of women whose husbands have an annual income of more than 11.2 million yen or 12.2 million yen. (Abridged)

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