Diet passes tax system revisions for fiscal 2015

The Diet on Tuesday approved legislation for tax system revisions for fiscal 2015, including postponement of the next consumption tax hike.

Prime Minister Shinzo Abe announced late last year he was putting off the planned tax hike to 10 percent until April 2017, a year and a half after the original target. The tax was raised from 5 percent to 8 percent last April.

Abe made the decision by using a clause in the consumption tax hike law that allowed the increase to be postponed if economic conditions warranted it. The legislation approved Tuesday removes the clause, so it cannot be invoked again.

The legislation calls for a cut in the effective corporate tax rate by 3.29 percentage points to 34.62 percent over the next two years.

Meanwhile, gasoline mileage standards for tax relief for environmentally friendly vehicles will be tightened.

Also, a higher tax will be imposed on buying a new minivehicle. But cars with superior environmental performance can enjoy a tax break over the next year.

Parents or grandparents can give up to ¥10 million for marriage or child care to each of their children or grandchildren without incurring the gift tax.

The ceiling on deductions from the residence tax for donations to hometowns and other municipalities will be doubled.