TOKYO (Reuters) - Japan's government is planning to propose raising the country's corporate tax starting in April 2026 to fund more defence spending, Kyodo News reported on Wednesday, aiming to double its defence budget to 2% of gross domestic product by 2027.
The government will also propose increasing the tobacco tax in April 2026 and income taxes in January 2027, Kyodo reported.
The corporate tax hike would take the form of a surtax of 4%, and the income tax rise would be a surtax of 1%, Kyodo said.
The coalition government agreed in 2022 to raise key tax rates to increase the defence budget, but stiff opposition among lawmakers has delayed implementation of the unpopular move.
The latest plan could meet pushback within the ruling coalition and from the Democratic Party for the People (DPP), a key opposition party whose cooperation is crucial for the coalition to stay in power.
Japan is struggling to secure funding sources for planned defence spending of 43 trillion yen ($283 billion) over the five years through 2027, which could further complicate its aim of balancing the budget - excluding new bond sales and debt servicing - by fiscal year 2025.
($1 = 151.6200 yen)
(Reporting by Makiko Yamazaki; Editing by Tom Hogue)
