Car acquisition tax to be axed in ’15

Kyodo, JIJI

The Liberal Democratic Party-led government plans to repeal the automobile acquisition tax when the consumption tax is raised to 10 percent in October 2015, LDP sources said Wednesday.

The ruling bloc also intends to increase auto weight and acquisition tax cuts for environmentally friendly vehicles when the sales tax is increased to 8 percent in April 2014 from the present 5 percent, they said.

The plans will be included in a 2013 tax reform guideline to be adopted Thursday, while the specifics, including measures to offset the reduced revenue, will be left for discussions on 2014 reforms.

In a related development Tuesday, the LDP, New Komeito and the Democratic Party of Japan agreed on steps to raise taxes on the wealthy, including an increase of 5 percentage points in the top income and inheritance tax rates.

Last June, the three parties agreed to raise the 5 percent consumption tax rate to 8 percent in April 2014 and to 10 percent in October 2015, while deciding to reach an accord on steps to raise taxes on wealthy people by the end of this March.

In their talks Tuesday, the three parties agreed to raise the maximum income tax from 40 percent to 45 percent and apply the new rate to people with annual incomes of over ¥40 million. The current top rate is levied on incomes topping ¥18 million a year.

The top inheritance tax rate will be hiked to 55 percent for taxable assets of over ¥600 million, from 50 percent for those of over ¥300 million.