A financial affairs subcommittee of the government's tax panel plans to compile a set of tax reform proposals on stock transactions by the end of September, the head of the subcommittee said Friday.

"I think we need to unveil our opinions at the appropriate time. I hope to compile (the proposals) in September," Masahiro Okuno, head of the Tax Commission's subcommittee, told a press conference after a meeting.

Earlier this week, Hiromitsu Ishi, head of the tax panel, told Kyodo News that the proposals are expected to include cutting the capital gains tax from 26 percent to 20 percent and bringing forward the abolition of a withholding tax option to around next spring.

The withholding tax option was originally to be done away with at the end of March this year, but it was extended for another two years as some lawmakers in the ruling coalition parties were concerned that abolishing it would discourage individual investors.

Under the current system, investors have the option of paying either a 1.05 percent withholding tax on the value of share sales, whether or not they have made any gains, or a 26 percent tax on the annual total of their capital gains by filing a separate tax return.

The panel hopes to come up with the recommendations by the start of an extraordinary Diet session to be convened in late September, Ishi said.

The subcommittee invited the head of the Japan Securities Dealers Association and officials from the National Tax Administration to listen to their views on tax reforms for stock transactions.

Eiichiro Okumoto, chairman of the stock dealers' association, asked for the withholding tax option to be maintained, but most members support doing away with it. the option, Okuno said.