TOKYO (Reuters) – Japan’s ruling Liberal Democratic Party (LDP) kicked off debates on Thursday on tax incentives next fiscal year to help Prime Minister Yoshihide Suga push his agenda on digitalisation and zero carbon emission backed by private-sector investment.
The incentives are expected to help pivot the world’s third- largest economy away from heavy government stimulus and back to private sector-led sustainable growth, after suffering the record postwar slump due to the COVID-19 pandemic in April-June.
“We must discuss how to establish tax system that responds to the premier’s calls for digitalisation and green society, which are pillars of a new era of with-corona and post-corona,” the LDP tax commission head Akira Amari told its gathering.
Amari, a former economy minister who is close to the premier, steers debates at the tax panel, which will compile next month annual tax-code revision for the next fiscal year from April.
The premier has set digitalisation and environmental policy as planks of his growth strategy, with the aim of accelerating innovation and investment in renewable energy and digital transformation.
The tax commission also is seen considering extending tax breaks on low-emission vehicles as well as home mortgages to stimulate private consumption which has been hit hard by the health crisis.
The tax breaks are expected to target next-generation lithium-ion batteries used for electric vehicles as lower costs of batteries could help electric vehicles replace gasoline cars, domestic media reported.
Suga unveiled a plan last month to cut greenhouse gases to zero by 2050 and become a carbon-neutral society, in an ambitious shift from Japan’s previous stance of aiming for carbon neutral in the second half of the century.
He hopes digital transformation will streamline business and government processes and revive flagging growth.
(Reporting by Tetsushi Kajimoto; Editing by Kim Coghill)