TOKYO Jan 24 Japan's ruling Liberal Democratic
Party and its coalition partner agreed on Thursday to expand tax
breaks on purchases of cars and homes to lessen the impact when
the government doubles the 5 percent sales tax in stages over
the next two years.
Lawmakers also agreed to extend tax breaks on energy
efficient cars indefinitely and raise income taxes on the
wealthy in their proposal for changes to the tax code from the
fiscal year starting in April.
Japan's cabinet is likely to approve the proposal without
significant changes as it rolls out big economic stimulus in an
attempt to boost economic growth before households feel the
impact of a higher sales tax.
The LDP agreed with coalition partner New Komeito to phase
out a special tax on auto purchases when it raises the sales tax
rate to 10 percent in 2015, according to a statement.
The two parties also agreed to make tax breaks on purchases
of energy efficient cars a "permanent" policy, which could give
domestic car sales a boost.
The statement called for a four-year extension of tax breaks
on mortgages and a temporary increase in the limit on income tax
deductions to prevent sharp declines in home sales after the
sales tax rises.
The top income tax bracket will rise to 45 percent from 40
percent from fiscal 2015 for those earning 40 million yen
($451,800) or more, the statement said.
The changes to the tax code will also make it easier for
companies to invest in new plants and equipment by establishing
new tax breaks and making it easier to depreciate the amount of
Economists and ratings agencies have often urged the
government to raise taxes to trim its public debt burden, the
worst among major economies, but previous governments have taken
only tentative steps to raise taxes.
($1 = 88.5400 Japanese yen)
(Reporting by Stanley White; Editing by Ron Popeski)