Tokyo — New Prime Minister Fumio Kishida will not change national taxes on capital gains and dividends on Sunday as he intends to pursue other measures to improve wealth distribution, such as raising wages for health care workers. Said.
Kishida, who vowed to close wealth inequality, previously said that reviewing these taxes would be an option to address income inequality.
The prime minister’s new stance shows his concern about the stock market turmoil caused by the higher tax outlook.
Fumio Kishida took the top spot in the world’s third-largest economy on Monday, replacing Yoshihide Suga, whose support was undermined by the surge in COVID-19 infections.
“I have no plans to touch income tax for the time being … there are many other things to work on first,” Kishida told a commercial broadcaster Fuji Television news program.
“There is widespread misconception that I might do it soon. If it isn’t wiped out, it will cause unnecessary worries to those involved.”
Some investors have expressed concern that the new prime minister may push for capital gains tax increases, pursued by Shinzo Abe, Japan’s longest-serving prime minister from 2013 to 2020. It suggests a shift from an investor-friendly economic policy.
Some analysts have called for raising the Japanese tax on investment income from the current 20%, further from the wealthy and financing steps to support low-income households.
Others were skeptical about the impact of such tax increases on closing wealth inequality.
Fumio Kishida’s ruling Liberal Democratic Party (LDP) did not mention a review of capital gains and taxes on dividends on the October 31 general election campaign platform, a draft obtained by Reuters said.
Investors are concerned about the potential negative impact of higher tax rates on capital gains and dividends on the stock market, which could cool local investment and drive foreigners away.
Japan’s benchmark Nikkei average has fallen 7% since Fumio Kishida won the LDP leader election at the end of last month.