A Controversial Move Amid Budget Deadline Pressure

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A Controversial Move Amid Budget Deadline Pressure

A Stalemate

The ruling coalition in Japan has agreed to raise the minimum income tax threshold from 1.03 million yen to 1.23 million yen. This decision comes after negotiations with the key opposition Democratic Party for the People (DPP) stalled.

The DPP had originally called for a more substantial increase to 1.78 million yen, arguing that it would ease the tax burden on lower-income earners. However, the gap between the two sides proved too wide, and a compromise could not be reached before the end of the year.

As a minority government, the ruling coalition needs the support of the DPP to pass the fiscal 2025 budget proposal in the hung parliament. However, negotiations broke down when the LDP and Komeito failed to present a new proposal on the income tax threshold, sparking frustration from the DPP.

With time running out, the ruling bloc is now moving forward with its plan to finalize the tax reform framework on December 20th. This means the threshold will be raised to 1.23 million yen, with no further increase.

The DPP remains opposed to this plan. "If they proceed without an agreement, we cannot support their budget proposal," said Yuichiro Tamaki, a key member of the DPP.

As the budget deadline approaches, the ruling parties will continue talks with the DPP. They will also explore potential alliances with other opposition parties, including Nippon Ishin (Japan Innovation Party).