Japan PM vows to include tax cuts for crypto in stimulus package

Japanese Prime Minister Shigeru Ishiba has vowed to include discussions of the opposition party’s tax cut proposals in his economic stimulus package, which includes tax cuts on gasoline and crypto assets.

According to a Bloomberg report published on November 20, Ishiba gave the green light to the economic stimulus package after promising to include the annual tax reform proposals of the opposition People’s Democratic Party.

The leading parties also agreed to increase the budget by the end of December to finance the stimulus package. The economic incentive package is planned to be released this week.

Makoto Hamaguchi, a top official in Japan’s DPP, said his party’s proposal includes an annual tax reform that includes increasing tax-free income from 1.03 million yen ($6,650) to 1.78 million yen ($11,435) for the next fiscal year and various tax cuts.

The DPP is asking the ruling party to consider temporarily lowering sales tax rates to 5% until wages increase by 2%. The party also proposes tax cuts for companies that raise wages, investment in emerging industries such as semiconductors and artificial intelligence, and profits from crypto assets.

“This is progress for us. “We have no intention of wavering on our target of increasing this to 1.78 million yen,” Hamaguchi said, adding that Japan’s tax-free income bar has not changed in the last 30 years. His party is determined to change this.

Hamaguchi stated that the DPP aims to finish these tax reform discussions by the end of this year.

In its policy statement, the DPP proposed taxing crypto earnings at 20%; This was a move that would put virtual assets on par with taxes on profits from the stock market. Under current Japanese regulations, crypto falls under “miscellaneous income,” meaning Japan’s crypto tax can be as high as 55% depending on personal income.

Meanwhile, profits from stock trading are subject to a maximum tax rate of 20% under Japanese law.

The DPP, a small opposition party in Japan, garnered enough votes in the country’s October elections to gain influence in the current parliament. So far, the party has continued to argue strongly against the ruling party on a case-by-case basis on proposed policies, acting as a balance of power for the incumbent government as it puts forward its own policy proposals.

One of the main points in the DPP’s pre-election policy statement was to “support the token economy using crypto assets”. The party has promised to use cryptocurrency as well as non-fungible tokens to support Japan’s economy if elected.

On the other hand, it is possible to find support for crypto and blockchain technology among the figures of the ruling party.

Following his victory on October 1, Liberal Democratic Party Chairman Shigeru Ishiba’s policy document stated that he wants to use blockchain technology and NFTs to stimulate Japan’s economy.

Masaaki Taira, the current chief of the LDP’s Web3 task force and Minister of Digital Affairs, has suggested applying Japanese intellectual property laws to NFTs. He also supports supporting cryptocurrency startups by reforming Japan’s tax system.