DPJ Administration's Tax Reform Policy (Outline)

◆In the general election held on 30 August 2009, the Democratic Party of Japan (DPJ) took 308 seats in The House of Representatives, giving it a majority. The result is the emergence of a new administration dominated by the DPJ. In the run-up to the general election, the DPJ's manifesto declared the party's commitment to fundamental tax reform, and fundamental reform of Japan's tax system is expected to proceed in line with the DPJ's election promises.

◆Until the election, the objective of fundamental tax reform declared by the outgoing LDP-led administration was to secure reliable sources of income for social security through reforms that included raising consumption tax rates. In contrast, fundamental tax reform by the DPJ administration will construct a new fundamental tax reform framework with the aim of making the tax system fairer.

◆Reforms are considered here in terms of six categories: (1) taxation on financial income, (2) other income tax, (3) consumption tax, (4) inheritance tax, (5) corporation tax, and (6) excise taxes. We also compare the DPJ's proposed new framework for tax reform debate with the system used to date.