Tokyo, Oct. 17 (Jiji Press)–Japan’s government and ruling parties are considering skipping measures to strengthen taxation on financial incomes, including capital gains and dividends, in fiscal 2020 tax system reform, Jiji Press learned Thursday.
Prime Minister Shinzo Abe’s administration looks keen to avoid possible criticism that tougher taxation on financial incomes could dampen market sentiment, informed sources said.
The Ministry of Finance is seeking to increase taxes on wealthy people with high incomes from stock investments after the Oct. 1 consumption tax hike, which is believed to be more painful to lower-income families.
A failure to boost taxes on financial incomes after the consumption tax rise “could reignite debate on inequalities,” a government official said.
Regarding the fiscal 2020 tax reform, the MOF says it is necessary to raise the tax rate on capital gains and dividends to at least 25 pct from the current 20 pct.
Within the ruling coalition, meanwhile, there are concerns that such a tax hike could hurt stock market stability, especially at a time of uncertainty over the world economy.