The ruling Liberal Democratic Party will propose that a uniform income tax deduction for couples replace the spousal tax deduction system as part of its initiative to encourage more women to work, it was learned Sunday.
The spousal income tax deduction system has been blamed for curbing women’s working hours. If a wife earns more than ¥1.03 million annually, the amount deducted from the husband’s taxable income falls as the wife’s income grows.
The government and the LDP Research Commission on the Tax System are discussing reducing or abolishing the spousal tax deduction system to create more job opportunities for women.
The LDP Headquarters for Japan’s Economic Revitalization is instead looking at a new tax system under which a uniform amount is deducted from the combined taxable incomes of a couple irrespective of the wife’s income, informed sources said.
If the wife chooses not to use the income tax deduction, the husband can deduct the corresponding amount from his income, according to the panel’s draft proposal.
The panel will discuss the idea at a meeting this week in hopes that it will be reflected in the revamped “Abenomics” strategy the government plans to draw up in June, the sources said.
Details will be worked out late this year during tax system reform discussions for fiscal 2015, they said.
In addition, the LDP will sort out problems associated with the pension system, under which the wife of a company employee is eligible for public pension benefits without paying premiums if she earns less than ¥1.3 million a year.
In its draft proposal, the LDP economic revitalization panel will call for a “portable” pension system that responds to different lifestyles. It hopes that the proposal gets discussed as part of a review to the public pension system that will start in full swing as early as June.
The panel will also look at easing criteria for child-care leave benefit payments in order to encourage more workers to take the leave.