The Liberal Democratic Party's tax panel wants to increase the number of residents paying one form of local income tax, as well as raise the basic rate, a senior panel member said Thursday.
During a meeting of the LDP Research Commission on the Tax System, members agreed in principle to tax wage-earning wives, who are currently exempt from the tax if they live with husbands who pay it, according to Nobutaka Machimura, the head of a panel subcommittee.
The decision will affect the portion of local income tax that is levied on an equal basis on most working residents who earn a certain amount.
The other form of local income tax differs according to residents' precise earnings.
The panel members also agreed to raise the tax rate, stating that it is too low in light of the fact that revenues are used to finance local social services, according to Machimura.
The size of the portion of local income tax in question currently ranges from 3,000 yen to 4,000 yen per taxpayer per annum, depending on the population of the area.
The panel plans to include these measures in a tax reform package for fiscal 2004.
Panel sources said Thursday that it has also decided to oppose a plan by New Komeito to reduce the size of income tax cuts or scrap them altogether in order to finance reforms for the cash-strapped state pension program.
The move is certain to complicate tax reform talks with the LDP's coalition partner. New Komeito is insisting on these changes in order to raise funds to allow the government to boost its contributions to the program.