Japanese corporations that raise workers’ pay by at least 3% could get extra tax relief under an incentive package being considered by the ruling Liberal Democratic Party.
The party’s tax research commission will discuss the proposal starting Nov. 22, panel Chairman Yoichi Miyazawa told The Nikkei Thursday. The plan is to include it in fiscal 2018’s tax reform outline, which is due to be compiled by Dec. 14.
Prime Minister Shinzo Abe has been calling on corporations to raise wages by 3%, and the LDP will aid that campaign by extending and broadening the tax program designed to promote income growth, which was due to expire at the end of this fiscal year.
Under the current system, large corporations that raise wages by 2% or more can deduct part of those extra labor costs from their tax bill. Under the amended rules, large enterprises that lift pay by at least 3% could deduct a higher percentage.
“The realistic path is to explore options as an expansion of the current plan,” Miyazawa argued. “We will deliberate on how to reward companies whose efforts surpass specified figures,” he added.
Miyazawa is also eager to improve incentives for the business succession tax program, which postpones or exempt inheritance and gift tax payments as a way to encourage heirs to take over small and midsize businesses. “The goal is to accomplish a complete generational change within 10 years’ time,” he said.