In the latest sign that the ruling Liberal Democratic Party will not reform a tax break that has long been viewed as a disincentive for working women, Secretary-General Toshihiro Nikai appeared to walk back his earlier support for the reform.
The spousal tax break reduces the annual taxable income of a household’s top earner by ¥380,000, but is forfeited if the spouse earns more than ¥1.03 million a year.
“We will make a cautious decision” about whether to ax the tax break, Nakai told reporters at a regular news briefing Friday.
This runs counter to his remarks from August, when he appeared to support scrapping the tax break.
Reports have emerged over the past few days that the party’s influential tax research panel may shelve a plan to ax the system from the LDP’s fiscal 2017 tax reform scheme.
While saying he would leave the matter to the LDP tax commission, Chief Cabinet Secretary Yoshihide Suga, too, said Thursday that a “cautious” approach must be taken on the issue.
Nikai’s remarks come at a time when efforts to do away with the spousal tax break appear to have stalled.
The system was introduced in 1961, at a time when women were still largely expected to become stay-at-home housewives upon marriage while their husbands worked full-time.
The cap on spousal income has prompted many wives to deliberately reduce working hours so their husbands don’t lose the deduction.
In recent days and weeks, however, concern has risen that while axing the tax break may encourage more women to work full-time, it may risk antagonizing high-income households, which had faced the prospect of heavier taxes to offset the abolition of the system.
A backlash from these households would be too great a risk to take amid growing speculation that Abe is eager to dissolve the Lower House for a snap election as early as January to further cement his time in power.
“Elections are a major factor in deciding whether to hasten discussion” of such a reform, Nikai said at the Friday briefing.
While some say the system discourages spouses from working, others are more optimistic that it “facilitates their contribution to child-rearing,” Suga said. “I think a cautious, nationwide discussion is necessary.”
Ending the system would have represented a major step forward in the much-hyped “womenomics” drive to draw more women into the nation’s dwindling workforce. But the LDP’s apparent backpedaling has spurred opposition criticism that the conservative party is not serious about changing the status quo after all.
“Should the system be kept as it is, I’d find it very disappointing,” Democratic Party leader Renho said Thursday.
“I would have to question the leadership of Prime Minister Abe and can only infer that the newest development underscores the ruling party’s negative attitude toward eliminating discrimination facing working women in terms of tax.”
Critics of the tax break have long said it is outdated at a time when women are increasingly participating in society, and when studies show that double-income households have long outnumbered traditional single-breadwinner families.
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