• SHARE

Prime Minister Shinzo Abe’s ruling coalition on Thursday unveiled a fiscal 2017 tax reform plan that seeks to expand controversial spousal tax breaks as part of its latest push to draw more women into the nation’s dwindling workforce.

The plan also dictated heavier levies on high-income households, as well as addressing long-standing calls from overseas, particularly Europe, for Japan to broaden its narrow definition of what constitutes beer.

Abe’s government is expected to rubber-stamp the proposal and submit the necessary amendments to the ordinary Diet session slated to kick off in early January. The proposal represents the first of a series of efforts to be implemented by the government over the next several years to bring Japan’s income tax system up to date.

“Many women working part-time are encumbered by certain hurdles today. I believe this reform will set them free of these challenges — at least tax-wise,” Yoichi Miyazawa, chairman of the tax reform commission of the ruling Liberal Democratic Party, told reporters Thursday.

All eyes were on the fate of the decades-long system of spousal tax breaks, which critics call a disincentive for women’s career development.

A holdover from a post-war era when women were largely expected to dedicate themselves to household duties after marriage, critics say the system continues to prioritize full-time housewives, ignoring the needs of a surging number of working women.

The system trims the taxable annual income of a household’s main earner by ¥380,000, but the benefit is lost if a dependent spouse — often a wife — earns more than ¥1.03 million a year. This has prompted many women to deliberately curb their working hours to stay below the income threshold.

The latest proposal put forth by the ruling bloc raises the threshold to ¥1.5 million.

In order to offset tax revenue losses caused by the expanded deduction, the coalition called for its phase-out in high-income households, seeking to introduce a ¥12.20 million cap on the main breadwinner’s annual income as a prerequisite for eligibility.

Although to a lesser extent, those who earn more than ¥11.20 million will also face heavier burdens, with their ¥380,000 annual deduction to be reduced to ¥260,000. The deduction will slip further to ¥130,000 if the breadwinner earns more than ¥11.70 million.

In another highlight, the plan seeks to straighten out the inconsistent way beer and beer-like alcoholic beverages are levied, which currently depends on the percentage of malt they include.

Under the current system, a 350-ml can of beer has a tax rate of ¥77, versus ¥47 for the happoshu lower-malt beverage often considered inferior to beer, and ¥28 for a hodgepodge of even cheaper quasi-beer beverages.

On Thursday, the LDP-Komeito ruling coalition suggested that the rate for all of these beverages be changed in stages and eventually move to a uniform ¥54.25 by October 2026. Although welcome news for beer companies, the change is likely to deal a blow to low-income earners who favor affordable beverages.

At the same time, the coalition addressed long-standing criticism from overseas that Japan sets too high a bar for the definition of what constitutes beer. Currently, beverages in Japan are not recognized as beer unless they contain more than 67 percent malt.

This has prevented many imported beers from being classified as beer. Instead they are typically labeled as happoshu, which has connotations of inferiority that arguably degrade their brand image. The Brewers of Europe, for one, released a statement in February 2015 expressing hopes that “a fair solution for the export of European beers may be found.”

Under Thursday’s proposal, the coalition urged that the current definition of beer be eased to include beverages containing at least 50 percent malt.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.

SUBSCRIBE NOW

PHOTO GALLERY (CLICK TO ENLARGE)