Japan should not rush into raising capital tax

Japan should not rush into raising capital tax

Japan's Prime Minister Fumio Kishida walks past a Japan Ground Self-Defense Force JGSDF Type mm wheeled self-propelled howitzer back left and a Type 12 surface-to-ship missile back right as he inspects equipment during a review at JGSDF Camp Asaka in Tokyo on November 27, 2021. KIYOSHI OTA POOL AFP TOKYO - Japan should not rush into raising capital gains tax, as that could send a wrong message to markets when Japan is encouraging financial investment, a senior government official said on Sunday.

Deputy Chief Cabinet Secretary Seiji Kihara said in a programme on FNN that a weakening of taxation could send a wrong signal that runs counter to our aim of expanding investment.

The tax has been contentious since Prime Minister Fumio Kishida swept power last year and pledged to review what is seen as an unfair tax that favors the rich with hefty financial investment income.

In Japan, the income tax and capital gains tax rates cause a wall of 100 million yen, which is known as the wall of 100 million yen, at which the effective tax rate on financial investment income starts to decline.

Kihara said that the tax commission of Kishida's Liberal Democratic Party LDP is debating the issues as part of an annual tax-code review.

Kihara said that the government was committed to boosting defence even though the funding for it was still in question, especially after a five-year spending plan ends in 2027.

Kihara said that we must do whatever we can, regardless of whether there are funding sources or not. The question is how to secure funding beyond 2027. We must first tackle spending reform, and we might ask everyone to share the burden broadly, if that's not enough. READ MORE: Tokyo has hyping up the security threat to justify its renewed push for militarization.

Last month, Kishida told his ministers to double the military outlay to 2 percent of gross domestic product within the next five years.