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TAX NEWS - 2010

Japan Tax: Kan promises consumption tax relief for low income earners in case of tax hike

YAMAGATA -- Prime Minister Naoto Kan has suggested a plan to reimburse potential increased consumption tax amounts to low-income earners to ease their financial burden.

The remarks came during a campaign speech in the city of Yamagata on June 30 in preparation for the upcoming House of Councillors election.

"There is a method by which those earning less than 3 or 4 million yen in annual income will get the increased consumption tax amount they have paid entirely reimbursed," the prime minister told the audience.

It is the first time that Kan, an advocate of raising the current 3 percent consumption tax to 10 percent, has referred to concrete annual income levels in easing the negative aspects of the potential tax increase.

"I'm not going to inflict a burden on low-income earners. I will adopt a method in which the increased tax amount is entirely reimbursed to them or food items are taxed at a lower rate so that the consumption tax will not be levied too much on ordinary citizens," he said during the speech.

The prime minister, who just flew back from the Group of Twenty summit meeting in Canada late last month, is apparently aiming to test the will of the public in the election by highlighting the tax plan.

However, he mentioned different income levels subject to possible tax reimbursement, saying earners of "less than 2 to 3 million yen" in annual income will benefit from the plan during a street speech in Aomori, while referring to earners of "less than 3 to 3.5 million yen in annual income" during a lecture in Akita.

"We have yet to discuss concrete annual income levels. It's something we will narrow down later," a close aide to the prime minister told the Mainichi.
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