The government's decision to retain the spousal tax deduction system has raised questions about whether the administration of Prime Minister Shinzo Abe is enthusiastic about women's empowerment.
Under the current system, 380,000 yen is deducted from the taxable income of the main breadwinners whose spouses' annual income is up to 1.03 million yen. Many companies also pay spousal allowances to employees who are eligible for the deduction.
Under the proposed plan, the upper limit on the income of spouses fully eligible for the deduction would be raised to 1.5 million yen. In return, households whose main breadwinner's income surpasses a certain level would no longer be eligible for the deduction to secure financial resources for the spousal deduction system.
The Abe government had initially aimed to eliminate the "1.03 million yen barrier," which the administration viewed as an obstruction to women's participation in society, by abolishing the system altogether. However, cautious views persisted in the governing bloc on the abolition of the system because it would mean tax hikes for those with full-time wives and whose spouses work part time. After all, the government decided to raise the upper limit on the income of spouses fully eligible for the deduction to 1.5 million yen.
Under the scheme, the number of households that newly become eligible for the deduction would increase, encouraging part-timers who are earning up to 1.03 million yen to earn more. Companies suffering from a workforce shortage would welcome the move.
If households whose main breadwinners earn high incomes were to be ineligible for the deduction and required to pay more taxes, it would help the government secure more financial resources and help reduce the income gap in society.
However, it must be kept in mind that the review of the spousal deduction system was originally launched to achieve a society in which women can proactively work rather than cutting taxes for households with part-time workers. Even if part-timers who have refrained from earning more than 1.03 million yen were to earn up to 1.5 million yen, most of them would remain part-timers.
Over 60 percent of women working in society quit their jobs after giving birth to their first child. To revitalize the economy and society, it is essential to ensure that full-time wives with special licenses and work experience, as well as women who can work only short hours, can play a leading role in society. Therefore, the direction of the government's policy of reforming the spousal deduction system is completely different from its original goal.
Needless to say, it is necessary to extend sufficient assistance to those who cannot work because they are preoccupied with childrearing and nursing care. The government should consider abolishing the spousal deduction system to divert funds saved through the move to measures to support child rearing and nursing care.
The spousal deduction system was introduced when a majority of married women were full-time housewives. Further expanding the system would go against the times.