Japan to Increase Taxes for Defence Budget Growth: Reports

Tokyo, Dec 11 (NationPress) The Japanese government is in the process of finalizing measures to raise corporate and income tax rates to finance its initiative to nearly double its defence expenditure to 2 per cent of gross domestic product (GDP), according to sources cited by local media on Wednesday.

The administration aims for a 4 per cent increase in corporate tax rates by April 2026, while a 1 per cent rise in income tax is anticipated to begin in January 2027, as reported by Xinhua news agency, citing Kyodo News.

Furthermore, it is likely that tobacco taxes will be incrementally increased starting from April 2026.

Japan plans to allocate a total of 43 trillion yen (approximately $284 billion) for national defence over the next five years leading up to fiscal 2027, with the government aiming to generate an additional 1 trillion yen annually through tax hikes, as per the report.

The government and ruling parties are currently drafting comprehensive tax reform proposals for fiscal 2025, which will commence next April. A finalized timeline for the tax increases is expected to be detailed in a draft to be completed by the end of December, according to the report.

The growth of Japan's military budget has sparked concerns both domestically and internationally.

The nation has established a target in its 2022 National Security Strategy to elevate defence spending to 2 per cent of GDP by fiscal 2027, after previously maintaining an informal ceiling of around 1 per cent, or roughly 5 trillion yen, in accordance with its war-renouncing constitution.