The government Tax Commission on Tuesday debated the idea of deducting housing loan interest.At a general meeting of the advisory panel to the prime minister, six of some 30 panel members voiced pros and cons about the idea while broadly discussing tax reductions to stimulate the moribund economy as well as long-term tax system reforms.The discussion took place as reporters sat in on the meeting for the first time ever. The panel will keep general meetings open to improve transparency unless the chairman decides otherwise to ensure “fair and neutral” discussions.One member said that for all the drawbacks, the interest paid on real estate loans should be deducted as a reward for those who stimulate the crucial housing market. Under the proposed system, interest payments will be deducted from income before taxes. It is considered to benefit the rich rather than the poor because income tax rates are greater for higher income brackets. In addition, the bigger the loan, the larger the tax cuts.The system has been recommended by the Strategic Economic Council, another advisory panel to the prime minister, to be added as an alternative to the existing tax incentive.The current system deducts a yearly 350,000 yen maximum from income taxes for six years. Individuals who have borrowed up to 30 million yen for housing can benefit from this.Other members said the proposed system has too many problems, contending, for example, that it would be unfair if apartment rent is not deducted. One expressed opposition because generally, the scope of taxation should be widened, not narrowed.Another member said regardless of whether it is implemented, a conclusion must be reached quickly because consumers otherwise will hesitate to buy homes. He added that he supports the new proposal.
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