Tokyo, Nov. 11 (Jiji Press)–The Japanese government is considering revising a tax incentive program aimed at encouraging wage increases at small and midsize companies, Jiji Press learned Wednesday. The government plans to allow firms to deduct up to 40 pct of additional payroll costs from corporate tax liabilities if they increase total salary payments by 5 pct or more from the previous fiscal year, informed sources said. The government plans to extend the tax incentive program, which is currently set to expire in March 2027, by three years. Meanwhile, some in the government and ruling parties argue that the tax incentive program, which results in an annual tax revenue loss of about 543 billion yen, does little to encourage wage hikes, and are calling for its abolition. Under the revised program, companies that increase total salary payments by 5 pct or more from the previous fiscal year would be eligible for a tax credit equivalent to 35 pct of the increase. The tax credit of 30 pct for companies that raise total payroll by 2.5 pct or more would be maintained, while that of 15 pct for those that raise total payroll with by 1.5 pct or more would be eliminated. An additional 5 pct credit for those certified as child-rearing support companies would also be maintained. Currently, the program refers to growth in total payroll. The government plans to change this to growth in per-employee pay. END [Copyright The Jiji Press, Ltd.]
