A key tax panel decided Tuesday to urge the government to toughen taxation on the well-to-do elderly and scale down the tax break for mortgages in its fiscal 2004 tax reforms.
Panel members said the two proposals will form the core of a governmental Tax Commission report that is to be completed and submitted to Prime Minister Junichiro Koizumi by the end of the month.
The panel will call for a reduction in the deductions granted for income from pension benefits, according to the members.
The plan is in line "with our belief that wealthy pensioners should shoulder some of the burden," Hiromitsu Ishi, chairman of the commission, said at a news conference after the group's meeting.
But he added that specifics, including the size and system for implementing the plan, need further debate.
According to its members, the panel will call for extending the current tax break for mortgages beyond the yearend deadline but will suggest the size of the tax break be cut.
Under the current program, new homeowners with mortgages are given tax reductions of up to 5 million yen from their taxable income over 10 years, or 500,000 yen per year.
But the reduction is scheduled to be scaled back to a maximum of 1.5 million yen over six years in 2004, and abolished altogether in 2005.
Governing coalition lawmakers have called for extending the current program, saying changes would lead to a fall in demand for new houses just when the economy is showing signs of improvement.
Ishi said the panel is likely to call for a plan that falls "somewhere in the middle" of the current program and the maximum of 1.5 million yen over six years initially envisioned for 2004.