Public Administration News

Japan: Policies to Take Big Bite Out of Income from 2013

Source:	search.japantimes.co.jp
Source Date:	Monday, October 17, 2011
Country:	Japan
Created:	Oct 18, 2011

Families headed by salaried workers will lose as much as ¥600,000 in take-home income in 2013, when the government raises taxes to fund disaster reconstruction and hikes pension premiums, estimates by a private research agency show. A family with a gross annual income of ¥4 million will see ¥132,900 less in take-home income, the Daiwa Institute of Research said. But a family that is generating an income of ¥8 million a year will receive ¥151,500 less. Meanwhile, families with an income of ¥10 million could see take-home pay fall by ¥407,700 per year, while a family earning ¥20 million will get ¥601,100 less, the institute said. In addition to tax hikes and pension charges, the calculation includes reductions in child allowances being given to families with a wage earner, spouse and two elementary-school-aged children. But the drop will be bigger for wealthier households, especially because those who make more than ¥9.6 million a year will not be eligible for child allowances starting in June 2012. The calculations, however, do account for a possible jump in the consumption tax, which is being discussed as part of integrated reforms to the tax and social security systems. According to separate projections worked out by Dai-ichi Life Research Institute, should the consumption tax be hiked to 8 percent from the current 5 percent, a family of four with two children and an annual income of ¥4 million would pay about ¥71,000 more per year in taxes alone, and a similar household earning ¥8 million would have to shell out an additional ¥117,000.