LDP panel targets small firms, home buyers for new tax cut

The ruling Liberal Democratic Party's tax panel basically agreed Tuesday to include tax deductions worth roughly 250 billion yen in the government's upcoming stimulus package.

The deductions on the drawing board would be aimed at encouraging smaller businesses to boost investment and at providing additional financial support to home buyers.

These steps, along with 2 trillion yen in income and residential tax cuts to come toward the latter half of the year, will be incorporated into the pump-priming package that LDP officials say will exceed 16 trillion yen.

In contrast, the Research Commission on the Tax System chose to forgo offering tax breaks to families with children aged 6 or below, saying that doing so would warp the existing income tax structure.

One panel member pointed out that since the 2 trillion yen in income and resident tax cuts effectively raises the income threshold from which taxes can be collected, it was less likely that a family that would potentially benefit from the deductions would have been paying income tax to begin with. "The issue of helping those with children can be debated later this year, when we start discussing permanent tax cuts through a review of the whole taxation structure," he said.