A political quarrel has broken out between Democratic Party for the People head Yuichiro Tamaki, who favors raising the tax-free income threshold, and his opponents, especially prefectural governors who fear the move would means less central government tax money for local services.
The disagreement has led to sharp words between Tamaki and the head of the National Governors‘ Association. It comes as the ruling Liberal Democratic Party-Komeito coalition is carrying out intense negotiations over the raise, a key goal of the DPP, whose support in parliament they need to hold a majority in the Lower House.
The DPP says that raising the annual level of nontaxable income from ¥1.03 million ($6,600) to ¥1.78 million is needed to provide relief to lower-income workers who are struggling due to rising prices. But regional governors are opposed, worried the proposal will reduce the central government’s financial assistance to local governments. Such governments, especially in rural areas, are already struggling with rising social welfare costs and reduced local tax revenue due to an aging, declining population.