Japanese Prime Minister Shigeru Ishiba has reached an agreement with a key opposition party on his new economic stimulus plan. As part of the deal, Ishiba promised that the opposition’s ideas for tax cuts would be discussed, including a proposal to raise the income tax-free limit from ¥1.03 million ($6,650) to a higher amount.
The package will also consider cutting gasoline taxes, another proposal from the opposition party, the Democratic Party for the People (DPP).
The government plans to pass a new budget to fund the stimulus package by the end of December, and the full package is expected to be released this week.
This deal gives Ishiba the green light to move forward with the stimulus plan, which he hopes will boost public support after his party lost its majority in last month’s election. For the DPP, it’s a win as they’ve managed to push for their tax ideas to be heard and considered.
The DPP’s key proposals focus on helping part-time workers by raising the tax-free income limit and cutting gasoline taxes, which they believe will help businesses struggling with labor shortages.
The government acknowledges that these changes could result in a loss of up to ¥8 trillion in tax revenue. However, the DPP is firm in its goal to increase the income tax-free limit to ¥1.78 million in the future.
The DPP also wants the government to consider other tax changes, like reducing the sales tax temporarily and offering tax cuts for businesses that raise wages or invest in growth areas like technology and artificial intelligence. They hope to wrap up discussions on these reforms by the end of this year.
The stimulus package is expected to include cash handouts for low-income families and subsidies for electricity and gas bills from January to March. It will also outline how Japan plans to invest more than ¥10 trillion in sectors like semiconductors and AI to support economic growth.
