Japan is planning to increase taxes on high earners in a move that is expected to raise an extra per year for the public purse.
The plan, devised by the ruling Liberal Democratic Party's tax panel and accepted in principle, would slash deductions for highly-paid employees but help freelancers and households caring for children or the elderly.
According to the Nikkei, the changes are expected to take effect in January 2020, shrinking the maximum earned-income deduction from 2.2 million yen (US$19,602) for those making over 10 million yen (US$89,200) annually to 1.9 million yen (US$16,948) for salaries over 8 million yen (US$71,280).
The details
- Some three million people, or 5% of all salaried workers, will pay more income tax. Employees with salaries of 8.5 million yen (US$75,820) will pay an additional 15,000 yen (US$134), while those earning 15 million yen (US$133,650) will lose an extra 86,000 yen (US$766), according to Ministry of Finance estimates;
- The tax burden will not change for employees earning less than 8 million yen, and households with children under 22 years old or those with elderly or disabled family members in their care will be exempted;
- The plan raises the basic deduction for all taxpayers from 380,000 yen (US$3,386) to 480,000 yen (US$4,277) to encourage diverse work styles, a move that will probably reduce taxes for freelancers, contractors and other non-salaried workers. But for those earning more than 24 million yen (US$213,840), the basic deduction will fall. It will be eliminated for the roughly 150,000 people receiving over 25 million yen (US$222,750)
- The exemption for public pension recipients will decrease across the board. Those with an annual income of over 10 million yen from pensions alone will have their exemptions capped at 1.95 million yen (US$17,375). About 3,000 people are expected to exceed that limit, including those receiving retirement money as a pension;
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
Japan is planning to increase taxes on high earners in a move that is expected to raise an extra per year for the public purse.
The plan, devised by the ruling Liberal Democratic Party's tax panel and accepted in principle, would slash deductions for highly-paid employees but help freelancers and households caring for children or the elderly.
According to the Nikkei, the changes are expected to take effect in January 2020, shrinking the maximum earned-income deduction from 2.2 million yen (US$19,602) for those making over 10 million yen (US$89,200) annually to 1.9 million yen (US$16,948) for salaries over 8 million yen (US$71,280).
The details
- Some three million people, or 5% of all salaried workers, will pay more income tax. Employees with salaries of 8.5 million yen (US$75,820) will pay an additional 15,000 yen (US$134), while those earning 15 million yen (US$133,650) will lose an extra 86,000 yen (US$766), according to Ministry of Finance estimates;
- The tax burden will not change for employees earning less than 8 million yen, and households with children under 22 years old or those with elderly or disabled family members in their care will be exempted;
- The plan raises the basic deduction for all taxpayers from 380,000 yen (US$3,386) to 480,000 yen (US$4,277) to encourage diverse work styles, a move that will probably reduce taxes for freelancers, contractors and other non-salaried workers. But for those earning more than 24 million yen (US$213,840), the basic deduction will fall. It will be eliminated for the roughly 150,000 people receiving over 25 million yen (US$222,750)
- The exemption for public pension recipients will decrease across the board. Those with an annual income of over 10 million yen from pensions alone will have their exemptions capped at 1.95 million yen (US$17,375). About 3,000 people are expected to exceed that limit, including those receiving retirement money as a pension;
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
