Cigarette, inheritance taxes targeted to fund disaster recovery

09/22/2011
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TOKYO (majirox news) — A ruling Democratic Party of Japan (DPJ) taxation committee decided Sept. 22 to propose raising tax rates on cigarettes and inheritances to help fund the cost of the recovery from the March 11 disasters, party sources said.

Targeting smokers and will benefeciaries is aimed at keeping down increases in corporate and income taxes, which the DPJ has decided internally that it must do anyhow.

Government tax authorities estimate that increasing income taxes for a set period can raise 7.5 trillion yen (around $96.2 billion) over 10 years and freezing corporate tax cuts for three years will reap 2.4 trillion yen (around $30.8 billion). Raising tax rates on tobacco will boost public coffers by a further 1.7 trillion yen (around $21.8 billion) and allow the government to avoid having to cover this amount with further increases in income taxes.

However, some within the DPJ argue this plan places too large a burden on active income earners, which prompted the government to consider raising inheritance tax rate as well. Increasing the inheritance tax rate by 10% would garner around 100 billion yen annually, easing the pressure placed on income taxpayers.

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