Ministry of Economy, Trade and Industry ``Buys what's sold'' - Proposal to revise the tax system for raising wages to finance the consumption tax cut

The focus is on reviewing tax incentives (special tax measures) for small and medium-sized businesses, as one of the 5 trillion yen per year needed for the consumption tax cut. Among these, the Ministry of Finance is targeting the wage increase tax system. The Ministry of Economy, Trade and Industry is calling for the continuation of the plan in light of the difficult business environment, and it is likely that the battle will become more intense as the tax system is revised at the end of the year.

Mechanisms in which companies can reduce their tax burden if they meet certain conditions are called special tax measures, and in many cases they continue without sufficient verification of their effectiveness. The reduction in tax revenue due to the special tax, which expires at the end of this fiscal year, is estimated to be 1.6 trillion yen a year, and the tax will be considered as one of the sources of revenue for the consumption tax cut, along with a review of national funds and subsidies.

The tax system that provides the largest tax reduction is the tax system that promotes wage increases. Approximately 275,000 cases will be eligible for the tax reduction in fiscal 2024, and the tax reduction will be approximately 333 billion yen. The system allows small and medium-sized enterprises that increase their total payroll payments by 1.5% or more from the previous year to deduct 15% of the increase from their corporate tax; if the increase is 2.5% or more, the deduction rate becomes 30%.

However, in recent years, due to the shortage of manpower...