The Finance Ministry might reduce tax breaks for pensioners in response to public criticism that the upper-class elderly are unduly benefiting, ministry sources said Sunday.

The government’s Tax Commission will study the proposal in discussions slated to begin Friday. The Finance Ministry is aiming to have the proposal reflected in the fiscal 2004 tax reform plan, the sources said.

Under the current national and corporate employee pension systems, recipients aged 65 or older are eligible for a minimum deduction of 1.4 million yen from their annual taxable income, regardless of their income levels.

The tax breaks have received criticism not only from younger generations but from some older people who say uniform deductions are unfair to low-income pensioners, the ministry said.

The proposed reduction of the breaks, introduced in 1988, will thus target pensioners in high-income tax brackets or those with large assets, the sources said.

In addition to the pension tax breaks, seniors are currently entitled to a deduction of 500,000 yen if their annual income is 10 million yen or less. They can deduct 480,000 yen if they are dependents.

The ministry will also review whether these breaks are actually necessary while watching moves by the health ministry to reform the pension system, the sources said.

The Finance Ministry will have to determine such issues as who should be eligible for reduced tax breaks.

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