Japan PM Vows to Include Crypto Tax Cuts in Stimulus Package

Japanese Prime Minister Shigeru Ishiba promises to include discussions on opposition party tax cut proposals in his economic stimulus package, which includes tax cuts for gasoline and crypto assets.

According to a <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-11-20/japan-s-stimulus-package-gets-dpp-nod-with-tax-talk-inclusion?srnd=phx-crypto” target=”_blank” rel=”nofollow”>Bloomberg In a report published on November 20, Ishiba received the green light for his economic stimulus package after promising to include annual tax reform proposals from the opposition party, the People's Democratic Party.

The main parties also agreed to increase the budget to finance the stimulus package before the end of December. The economic stimulus package is scheduled to come out this week.

Makoto Hamaguchi, a senior official in Japan's DPP, said his party's proposal includes an annual tax reform for the next fiscal year that would include increasing tax-free income from 1.03 million yen ($6,650) to 1. 78 million yen ($11,435) and carry out several tax cuts.

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

“That is progress for us. We have no intention of wavering in our goal of raising it to 1.78 million yen,” Hamaguchi said, adding that Japan's tax-free income bar has not moved in the past 30 years. His party is determined to change that.

Hamaguchi stated that the PDP intends to finalize these discussions on tax reform by the end of this year.

In its policy statement, the PDP proposed taxing crypto profits at 20%, a measure that would put virtual assets on the same level as taxes on profits accumulated in the stock market. Under current Japanese regulations, cryptocurrencies fall under the “miscellaneous income” category, meaning Japan's cryptocurrency tax could reach up to 55% depending on personal income.

Meanwhile, profits made from stock trading receive a maximum tax rate of 20% under Japanese law.

The DPP, a minor opposition party in Japan, generated enough votes in October's national election to maintain influence in the current chamber. Until now, the party has maintained a strong grip in debating against the ruling party over proposed policies on a case-by-case basis, acting as a balance of power for the incumbent while pushing its own policy proposals.

One of the main points of the PDP's pre-election policy statement was to “support the token economy using crypto assets.” The party promised to use non-fungible tokens, as well as cryptocurrencies, to boost Japan's economy if elected.

On the other hand, support for crypto and blockchain technology can also be found among ruling party figures.

After his victory on October 1, Liberal Democratic Party President Shigeru Ishiba's policy document indicated that he wants to use blockchain technology and nfts to boost Japan's economy.

Masaaki Taira, current head of the LDP's Web3 working group and Minister of Digital Affairs, proposed applying Japanese intellectual property laws to nfts. He is also in favor of boosting cryptocurrency startups by reforming Japan's tax system.