An advisory panel to the prime minister will shortly recommend that the government increase the fixed portion of local personal income taxes levied by prefectural governments and municipalities, panel sources said Thursday.
The Tax Commission, led by Kan Kato, president of the Chiba University of Commerce, will make the recommendation in a report to be submitted to the prime minister in mid-July, the sources said.
Local governments charge all household breadwinners between 3,000 yen and 4,000 yen annually, regardless of their income brackets.
As well as the fixed tax, local governments levy a much larger progressive direct income tax on income earners.
The size of the possible hike will be considered by the Home Affairs Ministry after the panel makes its recommendation, the sources said.
The panel will also recommend that the fixed tax be imposed on breadwinners’ spouses in cases where they earn annual incomes.
Of the 3,000-4,000 yen tax, 1,000 yen goes to prefectural coffers, while smaller municipalities receive between 2,000 yen and 3,000 yen, according to their populations.
When the central government last revised the fixed portion of local personal income taxes in fiscal 1996, it imposed a uniform 800 yen hike per breadwinner.
Japan’s local governments collected a combined 35.92 trillion yen in fiscal 1998 through a range of taxes, with personal income tax revenues totaling 8.96 trillion yen. The personal income tax revenues accounted for 25 percent of the total.