Finance Minister Masajuro Shiokawa plans to call on the ruling parties to consider an early abolition of the withholding tax on stock transactions.
“I want to ask the ruling bloc for an early simplification of the capital gains tax of stock sales so I can start reviewing capital gains tax rates,” Shiokawa told the Lower House Financial Affairs Committee on Thursday.
Under the current system, stock investors can either pay a 1.05 percent withholding tax on the value of share sales, whether or not they have appreciated, or a 26 percent tax on the annual total of their capital gains by filing a separate tax return.
The withholding tax option was originally set to be abolished at the end of March.
It was extended for another two years, however, as some Liberal Democratic Party lawmakers were concerned that its abolition would discourage individuals from investing in the stock market.
The ruling coalition — the LDP, New Komeito and the New Conservative Party — have agreed to work out a plan under which the capital gains tax would be reduced to 20 percent from the current 26 percent.
Shiokawa and New Komeito have argued, however, that any cut in the capital gains tax should be discussed together with the abolition of the withholding tax.
Road cash plan lauded
Hiroyuki Yoshino, president of Honda Motor Co., gave a tacit seal of approval Thursday to a proposal to extend the use of special revenues provisionally earmarked for road construction.
The revenues are generated primarily from gasoline and vehicle taxes.
“Considering the fiscal state of the country, I can personally accept some flexibility (in the usage of the special revenue) if they are used for transportation and urban functions,” Yoshino told reporters.
Regarding specific examples of projects that could benefit from the extended use of the funds, Yoshino cited an “intelligent community vehicle system” currently being proposed by Honda.
The proposed project targets the shared use of low pollution vehicles among community members — a measure that would reduce pollution and helping solve traffic congestion, according to the company.
Meanwhile, Yoshino said the government should further clarify the definition of the “environmentally friendly cars” they intend to use in place of some 7,000 cars currently owned by the central and local governments.
At present, the kind of yardstick the government intends to employ remains unclear, Yoshino said.
“I cannot see whether the government is considering fuel efficiency or emission volume.”
Vehicles that run on natural gas, methanol or electricity, as well as hybrid cars are generally considered as low pollution vehicles.
But the auto industry has been insisting that gasoline-powered, low emission cars should be considered as eco-friendly vehicles.
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