Japanese Government Panel Starts Discussions toward Designing Refundable Tax Credit System Focused on Working-Age Earners

The Yomiuri Shimbun

13:35 JST, April 10, 2026

A panel of experts established under the National Council on Social Security, a body formed by the government and both ruling and opposition parties, on Thursday began discussions aimed at resolving key questions involved in designing a refundable tax credit system. The majority of participants said the program should primarily target low- and middle-income working-age earners and should, in principle, provide support on an individual basis.

A refundable tax credit is a system under which, based on a person’s income, a certain amount is deducted from their income taxes and other levies, with any portion that cannot be fully offset in this way paid out as a cash refund. Prime Minister Sanae Takaichi has called for incorporating such a scheme into Japan’s tax laws, and for implementing a two-year consumption tax cut on food products as a temporary bridge until the new system can be put in place.

On Thursday, the panel discussed four main points of concern about a possible refundable tax credit system: the unit of support, the broad design of the system, the target recipients and the treatment of financial income and assets.

On the question of the unit of support, a series of participants argued that assistance should be provided on an individual rather than household basis, citing the need to encourage people to seek employment. Others said individual assistance should be paired with household-based assistance in order to preserve fairness among households.

As for the overall framework, some participants said the amount of support recipients get should be linked to income or earnings and reduced once they exceed a certain income threshold. There were also calls for the system to be designed to ensure that people’s take-home pay rises as their income increases.

Regarding who should be eligible, many participants said the program should be primarily targeted toward members of the working-age population, such as people with a certain level of earned income who are paying social insurance premiums.

On whether difficult-to-track financial income and assets should be reflected in the amount of support, some participants said that should be treated as a matter for future consideration. Within the government and the ruling coalition, calls are growing to start by establishing the tax credit system in a simplified form that does not take into account the size of a person’s assets.

While acknowledging the need for separate discussions on tax and social security reform, the expert panel is poised, for the time being, to focus its efforts on designing a refundable tax credit system.