Prime Minister Shinzo Abe's reflation campaign last year helped draw the most women to work since 1991. He now plans to add a stick to that carrot, scaling back tax benefits for spouses with limited earnings.
The administration is reviewing rules that let about 14 million married workers earn as much as ¥1.03 million a year tax-free. Removing the measures, which cost an estimated annual ¥600 billion in fiscal revenue, could spur some women to work longer hours, and help bolster Japan's shrinking job market.
"The traditional family structure where husbands go out to work and wives look after the home is crumbling," said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co. in Tokyo. "The labor force is shrinking and there is a growing need for immigrants or women to work."