Image Credits : Nippon
Taro Kono, a prominent figure in Japan’s Liberal Democratic Party (LDP), has vowed to abolish the country’s year-end tax adjustment system if elected as the party’s president. In a bold policy proposal unveiled on Thursday, Kono pledged to require all citizens to file their tax returns, a significant shift from Japan’s long-standing tax practices.
Kono, a former foreign minister and current digital minister, is seen as a key contender in the race to succeed Prime Minister Fumio Kishida as LDP president. Taro Kono’s tax reform plan aims to streamline Japan’s complex tax system, which currently relies on employers to handle income tax deductions on behalf of workers and simplify it by putting the responsibility on individual taxpayers.
Under the current system, employers automatically deduct taxes from workers’ salaries throughout the year. At the end of the fiscal year, a final adjustment, known as “Uematsu chosen,” is made to reconcile any overpayments or underpayments of taxes. This system, while designed to be convenient, has faced criticism for its lack of transparency and for putting too much burden on employers.
Kono’s proposal would shift the tax burden directly to individuals, requiring them to file their annual tax returns, similar to the system used in many Western countries. He argues that this change would increase transparency and empower citizens to better understand their tax obligations and potential deductions.
“By abolishing the year-end tax adjustment system, we can foster a more transparent and fair tax process that encourages citizens to take ownership of their tax filings,” Kono said during a press briefing. He also noted that the move could reduce the administrative burden on companies, particularly small and medium-sized enterprises, which often struggle to handle the complex calculations required under the current system.