The Abe administration is pushing for a review of the tax and social security benefits for households with full-time housewives or low-income housewives, on the grounds that such rules serve as disincentives against women’s greater participation in the labor force even as the nation faces a steep decline in its working-age population.
In making the review, the government also needs to look at other hurdles that discourage women with children from spending more working outside the house. Otherwise, it could end up merely adding to the burden on households by abolishing or scaling down the benefits.
Salaried workers can have their taxable income reduced by ¥380,000 if their spouses earn less than ¥1.03 million a year. If the spouses earn between ¥1.03 million and ¥1.41 million, the main bread earners can still deduct an amount lower than ¥380,000 from their taxable income. Separately, if the spouses earn less than ¥1.3 million a year, they can be exempt from pension premium payments and be covered by the main bread earners’ corporate pension schemes.
Many of housewives who work part-time jobs are believed to adjust their work hours and keep their annual income from surpassing these thresholds to retain the status advantageous in tax and pension premiums.
Meanwhile, there has been criticism that these rules favor single-income households over dual-income families, which — unlike decades ago when the rules were introduced — account for a majority of Japanese households today.
Prime Minister Shinzo Abe in March told a joint meeting of the government’s Council on Economic and Fiscal Policy and another panel on industrial competitiveness to consider changes to the rules as a means of promoting women’s greater participation in the workforce.
In the background is the alarming decline in the nation’s working-age population between 15 and 64 years old, which in the 2013 statistics fell 1.16 million from a year earlier to 79 million — below 80 million for the first time in 32 years. With the rapid aging of the population and low birthrate, experts warn that the number of working-age people would fall by another 10 million to below 70 million by 2030.
It makes sense to tap into Japan’s under-utilized workforce to make up for the labor shortages and to support the nation’s economic vitality. Still, the government needs to realize that it requires more comprehensive efforts than simply eliminating the spousal tax and social security benefits to boost the labor participation of women, especially working mothers.
A record high 63 percent of women aged 15 to 64 held jobs as of last September, up 6.2 percentage points compared with a decade ago, according to an Internal Affairs and Communications Ministry survey.
Part of the rise was attributed to an increase in the number of single-working women amid the recent trend to postpone marriage. The rise in employment was particularly evident among women in their 30s.
But the survey also showed that only about 40 percent of women continue working after the birth of their first child, highlighting the need to provide support for families with children both at home and work. The survey showed that 56.5 of the women are being hired as part-timers — a ratio much higher than the 21.3 percent for men. While part-time status is seen as one reason that women find it difficult to continue work after childbirth, women with full-time jobs — particularly in metropolitan areas — often give up or postpone returning to work following child-care leave after failing to find nursery schools for their children.
During a recent meeting of the government’s Tax Commission to hear opinions about the spousal tax deductions, experts pointed to the need to change the broad social environment, including child-care infrastructure and the lingering wide wage disparity between men and women, in order to encourage more female labor participation.
One of the experts said there is a deep-rooted gender-based division of labor in which the responsibility of housework and child care tends to concentrate on women, who end up giving up jobs after marriage or childbirth. It is surely a challenge that cannot be addressed by merely changing the tax or social security provisions.