The ruling Liberal Democratic Party’s tax panel broadly approved on Thursday a draft tax reform plan under which about 5 percent of all salaried employees in Japan would face higher income taxes.

The LDP and its Komeito ally are slated to adopt their fiscal 2018 tax reform package on Dec. 14, including revisions to the income tax system that will be implemented in January 2020 and are projected to increase income tax revenue by about ¥100 billion.

According to the LDP’s draft plan, the basic deduction from taxable income of all taxpayers will be raised by ¥100,000 to ¥480,000 a year, while additional deductions for salary earners, including government workers, whose size varies according to income will be uniformly cut by ¥100,000.

The changes are aimed at reducing inequalities in the income tax system, which is currently considered favorable to company employees.

Following the revisions, higher taxes are expected to hit about 3 million people with annual income of over ¥8 million, excluding families with children aged 22 or younger and those with members in need of elderly nursing care.

Of those facing higher taxes, families with incomes of ¥10 million are forecast to see a tax increase of ¥60,000.

Deductions for public pension recipients will also be reduced by up to ¥200,000 if they have other income of over ¥10 million.

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