TOKYO, Dec 4 (Reuters) – Japan should avoid rushing the capital gains tax as it could send the wrong message to markets if Japan encourages financial investment, a senior government official said on Sunday.
“Tightening taxation could send the wrong signal that goes against our goal of expanding investment,” Deputy Cabinet Secretary Seiji Kihara said on FNN, referring to the capital gains tax.
The tax has been controversial since Prime Minister Fumio Kishida came to power last year and vowed to review what was seen as an unfair tax that favors the wealthy who earn hefty financial investment incomes.
In Japan, differences between income tax and capital gains tax rates cause the so-called 100 million yen wall, at which point the effective tax rate on financial investment income begins to fall.
Kihara’s comment comes as the Kishida Liberal Democratic Party’s (LDP) tax commission is discussing the issues as part of an annual tax code review.
Separately, Kihara said the government is committed to strengthening defenses, though funding to do so is still in question, especially after a five-year spending plan ends in 2027.
“We have to do what we should be doing, whether there are sources of funding or not,” Kihara said. “The question is how do we secure solid sources of funding beyond 2027. We need to tackle spending reform first, and if that’s not enough, we could ask everyone to share the burden.”
Last month, Kishida urged his ministers to double military spending to 2% of gross domestic product within the next five years in the face of regional threats like increasingly assertive China and unpredictable North Korea.
Reporting by Tetsushi Kajimoto; Edited by Robert Birsel
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.