Japan's Defense Boost Tax Hikes May Start in April 2026

Tokyo, Dec. 11 (Jiji Press)--The Japanese government and the ruling camp are considering a plan to start raising corporate and tobacco taxes in April 2026 to boost the country's defense spending, informed sources said Wednesday.

The plan also calls for raising income tax in January 2027 to finance higher defense spending. The government and the ruling coalition of the Liberal Democratic Party and Komeito aim to include the plan in a tax system reform package for fiscal 2025, which starts next April.

In its tax system reform package for fiscal 2023, the government decided to raise corporate, tobacco and income taxes to secure over 1 trillion yen in fiscal 2027 to finance higher defense spending.

Specifically, the government is set to add a surtax of 4 pct to corporate tax from April 2026 as a special tax, which will not target over 90 pct of small and midsize businesses.

The government also plans to raise tobacco tax by 0.5 yen per cigarette annually from April 2027 for three years after raising the tax rate on heated tobacco products to the same rate as that on cigarettes in April 2026.

[Copyright The Jiji Press, Ltd.]