The Kishida government’s much-touted tax cut will start in June

Tokyo, May 30 (Jiji Press) – A ¥40,000 per person tax cut, widely touted by the government of Japanese Prime Minister Fumio Kishida, will be implemented from June as its economic impact, including on private consumption, continues to must be waited for. .

Businesses and local governments are in the final stages of preparing for the tax cut, with officials involved in related work complaining about the administrative burden.

Kishida has emphasized that the tax cut is intended to ensure income growth that exceeds inflation.

The tax cut is a temporary measure that will reduce income taxes by ¥30,000 and housing taxes by ¥10,000 over one year. The measure will apply to taxpayers with an annual income of ¥20 million or less and their spouses and dependents.

Salaried employees will see the tax cut on their paychecks for June and beyond. Up to ¥30,000 will be deducted from income tax for June, and if the tax amount is less than ¥30,000, the remaining amount will be reduced in July and beyond. The residential tax portion will amount to “¥0” in June, and the annual tax amount minus ¥10,000 will be collected evenly for eleven months starting in July.

If the amount of tax paid is less than the tax reduction, the difference will be rounded up and expressed in units of ¥10,000.

The government expects that the tax cut and wage growth will have a synergistic effect, creating a positive economic cycle.

“By cutting taxes at a time when wage growth (reflecting the wage increases offered during this year’s ‘shunto labor-management negotiations’) is emerging, we will dispel deflationary sentiment and accelerate the economy’s transition to a new phase support,” Finance Minister Shunichi Suzuki said. said.

On the other hand, the tax measure, which combines tax cuts and benefits, is complicated, making companies and local governments extremely busy preparing for its implementation.

According to an estimate from Tokyo-based accounting software company Freee KK. it takes a total of more than 40 hours for a company with approximately 100 employees to reflect the tax measure in their salaries.

The National Tax Authorities promote the tax measure on a special website and hold briefing sessions. However, many people complain that it is very difficult to understand due to the many technical terms.

An employee in charge of labor management at a small company in Tokyo said it is worrying that many company employees have part-time jobs, as such workers can receive the tax cut twice, at the company and at their second job.

The government decided on the tax cut late last year, and a city designated by the ordinance began preparations in January. “Usually it takes about a year to implement a measure, but this time the system is complicated and the preparation time is short,” said a city official.

Officials at a district office in Tokyo have been working on Saturdays since March and even during Golden Week in May, mainly to prepare communications to companies about the housing tax cut.

“We have done the preparations meticulously, but I wonder how much gratitude people will feel when they see ‘¥0’ (in the housing tax portion) on their paychecks (for June),” said a district official with a bitter smile .