Economics
Japan Plans Carrot-and-Stick Tax Changes to Drive Wage Gains
- Temporary measure will help firms that raise pay by 3% or more
- Income tax to rise modestly for high-income earners in 2020
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Japan will adopt a carrot-and-stick approach to boost pay for workers by providing tax benefits to companies that increase spending on wages and investment while clamping down on benefits for firms that don’t.
Companies that raise pay by at least 3 percent a year or invest in their human capital through skills training will be able to reduce their corporate income tax, according to documents from the ruling coalition obtained by Bloomberg News. The changes will be in place from fiscal 2018 to 2020, and may see some small and medium companies reduce their tax bills by up to 20 percent, according to the document.