Are you wondering how the tax and economic policies of the newly elected Liberal Democratic Party(LDP) leader, Shigeru Ishiba, will affect the Japanese economy? The YouTube video, the “Shigeru Ishiba’s Surprising Stance on Corporate Taxes Revealed” provides an easy-to-understand explanation of the critical points. This article summarizes the video and provides background on specific tax policy changes and economic policies.
Shigeru Ishiba’s Economic Policies and the “New Capitalism” of the Old Regime
The new prime minister, Shigeru Ishiba, is committed to continuing the “new capitalism” of the Kishida administration. He is promoting policies that place particular emphasis on investment in people. Specifically, he aims to stimulate domestic investment and accelerate the transition to a digital society.
However, these policies have also been criticized for their unclear novelty, and many have pointed out that they are inadequate, especially in reducing inequality.
Raising Salaries and Overcoming Deflation
As part of this policy, we aim to promote a virtuous economic growth and distribution cycle by encouraging salary increases. Overcoming deflation is considered a top priority. However, it is also cautious about managing energy prices, and its reluctance to subsidize gasoline taxes has attracted some attention.
Details of Tax Changes
Shigeru Ishiba is considering raising the corporate tax rate. The effective corporate tax rate is 30.62%, which is already high compared to other countries. I question where there is room to raise it.
He has also indicated no concrete plans to raise the consumption tax.
However, this is a political term, and we insist on considering it. It also suggests that there is room for discussion in the future = to raise it. It also states that the current policy regarding defense taxes must be maintained and periodically reviewed.
Financial Income Tax Enhancements and Implications
In addition, the financial income tax will be strengthened. There is already concern about the impact on small businesses and investors of the 22.5% tax rate being set for the portion exceeding JPY330 million. The Ministry of Finance’s move will bring this level down to about JPY100 million = future tax increases are expected.
Fluctuations may also be seen in the stock market. There have been reported cases of stock prices falling immediately after Shigeru Ishiba took office.
Labor Market and Taxation
Raising the minimum wage is on the labor market agenda, and a policy has been announced to aim for a national average minimum wage of 1,500 yen. This is expected to increase consumer spending and promote economic growth. However, there are concerns that the 1.3 million yen annual income barrier and social insurance premiums will put pressure on the profits of small and medium-sized enterprises.
I am concerned that although salaries may increase somewhat, take-home pay will not increase, and the trend will eventually be toward higher taxes.
Political and Electoral Implications
It’s not uncommon to hear that taxes have gone up when you find out. That’s because people are not very interested in these changes in party leadership.
To avoid that, let’s try to keep up with the news, even if only for a little while. It will give you an excellent opportunity to think about how you want to approach your future work and tax-saving policy.
