The Tax Commission's subpanel on local corporate taxation wrapped up re-examination of its new local corporate-tax proposal Friday, adding a few technical ideas to its earlier report released last July.
The subpanel has been reconsidering its tax proposal since Tokyo Gov. Shintaro Ishihara announced his controversial bank tax plan -- similarly based on the size of targeted companies -- in February.
The tax proposed by the subpanel would target firms in all sectors in all prefectures, while Ishihara's tax, which took effect in April, will be levied only on major banks operating in Tokyo.
The subpanel suggested a few optional measures that would lessen the tax burden on small and midsize firms if the proposed size-based business tax replaces the existing one. They include a lower tax rate, basic deduction and exemption points.
Unlike the current system, the proposed tax would be levied even on firms in the red because company size, not income, would serve as the basis of taxation.
The subpanel basically agreed that the new method should be combined with the present method for the time being to mitigate an excessive tax increase on loss-making small firms, said subpanel head Hiromitsu Ishi.
The subpanel did not say how exactly the new tax should be determined, leaving the issue open to public debate.
In the July report, it suggested four basic options as a taxation standard, such as the amount of capital and aggregate salaries of each business. These options are separate from the newly suggested special measures for smaller firms.
The Tax Commission will discuss the subpanel's latest report at its general meeting on May 23.