Japan’s new ruling party to start tax reform talks this week

JIJI

The Liberal Democratic Party’s own Tax System Research Commission will begin discussions on tax reform for fiscal 2013 later this week, LDP sources said Tuesday.

The LDP plans to finish work by late January on establishing guidelines for reform to be agreed on next fiscal year, which starts April 1, the sources said.

Tax reform guidelines are usually compiled in early or mid-December, but work this year was delayed by the Lower House election Sunday.

The victorious LDP plans to hold an informal meeting of executives of its tax panel, chaired by Takeshi Noda, to determine which issues the panel should focus on and how discussions should progress.

The Tax Commission, an advisory body to the prime minister, played a key role in discussions on tax system reform under the Democratic Party of Japan.

The LDP hopes to return the role to its own tax commission when it takes over running the government next week by forming a coalition with New Komeito. The party is thus eager to begin the tax panel’s talks prior to the formation of a new government.

The fiscal 2013 reforms are likely to include an income tax hike for high income earners, an inheritance tax increase, measures to reduce the impact of the planned consumption tax rise on low income earners and tax breaks for homebuyers.

Discussions on these issues have been put off under a tax and social security reform deal struck by the DPJ, the LDP and New Komeito in June. At the time, the three parties agreed to hold further discussions.

The LDP hopes to start talks with New Komeito and the DPJ after speeding up efforts to reach a party consensus, the sources said.