- Prime Minister called review of these taxes an “option” to correct the wealth gap
- New tax stance indicates concern in nervous markets
- The PLD’s draft electoral campaign plan does not mention the review of these taxes
TOKYO, Oct. 10 (Reuters) – Japan’s new Prime Minister Fumio Kishida said on Sunday that he would not seek to change the country’s taxes on capital gains and dividends for now as he intends to pursue d ‘other measures for a better distribution of wealth, such as increasing the salaries of medical personnel.
Kishida, who is committed to rectifying wealth disparities, had previously said revising these taxes would be an option to close the income gap.
The Prime Minister’s new position indicates that he is concerned about the nervousness of the stock market caused by the prospect of higher taxes.
Kishida took the top job in the world’s third-largest economy on Monday, replacing Yoshihide Suga, who had seen his support undermined by the surge in COVID-19 infections.
“I have no plans to touch the financial income tax at this time… There are a lot of other things to sort out first,” Kishida said on a news program on the commercial broadcaster Fuji Television Network.
“The misconception is spreading that I might be doing this soon. It will unnecessarily worry those involved, if it is not firmly dispelled.”
Some investors have expressed concern that the new prime minister may pursue capital gains tax hikes, signaling a turnaround from investor-friendly economic policies pursued by Japan’s longest-serving prime minister Shinzo Abe , from 2013 to 2020.
Some analysts had called for increasing the Japanese tax levied on investment income from the current 20% in order to further increase the incomes of the rich and to finance measures to support low-income households.
Others were skeptical of the impact such tax hikes could have on correcting wealth disparities.
The ruling Liberal Democratic Party (LDP) in Kishida made no mention of revised capital gains and dividend taxes in its campaign platform for the October 31 general election, according to a draft obtained by Reuters . Read more
Investors were concerned about any negative impact a higher tax rate on capital gains and dividends might have on stock markets, which could dampen local investment and drive foreigners away.
Japan’s Nikkei benchmark average (.N225) has fallen 7% since Kishida won the PLD leadership election late last month.
Reporting by Kiyoshi Takenaka and Tetsushi Kajimoto; Editing by Muralikumar Anantharaman
Our Standards: Thomson Reuters Trust Principles.