LDP Begins Full-Scale Talks on Tax Reform for FY 2026

Tokyo, Nov. 20 (Jiji Press)–Japan’s ruling Liberal Democratic Party on Thursday began full-scale talks on revising the tax system for fiscal 2026, including how much to raise the country’s minimum taxable income level. “From the tax side, we must fully support efforts to address key issues, such as promoting investments, raising wages and dealing with (rising) prices,” Itsunori Onodera, chairman of the party’s Tax System Research Commission, said at the panel’s general meeting. The party plans to outline a tax system reform package next month after holding discussions with its new coalition partner, Nippon Ishin no Kai (Japan Innovation Party). This year, the minimum taxable income level was raised from 1.03 million yen to 1.6 million yen. The LDP and Nippon Ishin plan to raise the threshold further by linking it to inflation. They will also hold talks with the Democratic Party for the People, which calls for setting the threshold at 1.78 million yen. Meanwhile, the LDP, the main opposition Constitutional Democratic Party of Japan and four other parties have agreed to abolish the provisional tax surcharge for gasoline and diesel on Dec. 31 and April 1 next year, respectively. How to make up for the resulting tax revenue loss, estimated at about 1.5 trillion yen, remains an issue. Proposed solutions include reviewing special tax measures for companies such as tax cuts to promote research and development and wage hikes, as well as raising taxes on financial income. The LDP panel will also consider raising the departure tax from the current 1,000 yen per person. Some in the government and the ruling bloc have proposed raising it as high as 5,000 yen. It will also draw a conclusion on whether to abolish the environmental performance discount on automobile purchases, in light of the impact of higher U.S. tariffs. Other issues to be discussed include whether to extend and expand a tax break for housing loans and whether to create a tax incentive to promote corporate capital spending. END [Copyright The Jiji Press, Ltd.]