Japan’s Ruling Coalition Agrees on Income Tax Hike for Defense

Japan’s Prime Minister Sanae Takaichi and her ruling coalition signed off on an income tax hike starting in 2027 to help finance a planned increase in defense spending, moving forward long-delayed plans as security concerns intensify.

The Liberal Democratic Party and its junior coalition partner Japan Innovation Party agreed on raising the income tax rate by 1 percentage point across all income brackets beginning in January 2027, according to finalized tax reform plans on Friday. The additional revenue would be used to finance the nation’s defense needs.

For now, the effective income tax rate would remain unchanged, as a reconstruction ...