TOKYO -- The ruling coalition approved an outline of tax system reforms for fiscal 2019 on Dec. 14, calling for about 167 billion yen in tax cuts.
The outline states that the 8 percent consumption tax will definitely be raised to 10 percent in October 2019 as scheduled.
To help prop up consumption following the tax increase, the outline calls for cuts in housing and automobile-related taxes, while introducing a measure to slash residential taxes for single parents who have never married. The annual automobile tax will be cut by up to 4,500 yen in fiscal 2019. Newly purchased automobiles to be registered in October 2019 and later will be subject to the measure.
The environmental performance tax, the rate of which varies from zero to 3 percent depending on a vehicle's fuel efficiency, will be cut by 1 percent point over a one-year period from October 2019. Consumers pay the tax when they buy cars.
The tax reform outline also states that levies on car sharing will be fundamentally reviewed, stating that the taxation system "should be studied from a mid- to long-term perspective." Automobile-related tax cuts will amount to some 53 billion yen overall.
The period for home loan tax cuts, providing for reductions of up to 400,000 yen a year depending on the outstanding amount, will be extended from the current 10 years to 13 years. A system to reduce the tax worth 2 percent of the value of the building over the three-year extension period will also be introduced. Overall, housing-related tax reduction will total about 114 billion yen.
The standards for never-married single-parent household incomes eligible for residential tax exemptions will also be relaxed. The ruling coalition said the government will consider additional tax privileges for such households in tax system reforms for fiscal 2020.
(Japanese original by Daisuke Oka, Business News Department)