The land ministry plans to seek an extension of tax breaks for housing loans in light of weak economic activity, a senior ministry official said.
Extending the tax breaks is expected to be "one of the most important requests for fiscal 2004 tax reforms," Toshiki Aoyama, vice minister for land, infrastructure and transport, told a news conference Monday.
Although the ministry has made no decision yet, it believes a planned cut in the tax break would adversely affect economic activity amid stagnant first-time home purchases due to high unemployment and falling personal income, Aoyama said.
Under the existing system, new homeowners are allowed to deduct up to 5 million yen from their taxable income over 10 years.
The government plans to lower the maximum deduction to 1.5 million yen and length of breaks to six years for people who move into new homes in 2004, before abolishing the break in 2005.
Finance Minister Masajuro Shiokawa said Monday the scheduled reduction and abolition of the tax breaks "may be too early."