Crypto Tax Cuts Will Happen In Japan If DPP Wins Upcoming Election

Yuichiro Tamaki, the leader of the Japanese Democratic Party for the People (DPP), has shared his plans for cryptocurrency tax reform in Japan. He urged supporters of digital assets to back efforts aimed at lowering excessively high local crypto tax rates while simultaneously promoting digital innovation.

As of September 27th, 2024, Shigeru Ishiba, a member of the Liberal Democratic Party, was elected as the next Japanese Prime Minister. However, his previous role as defense minister and his preference for higher taxes and increased money supply may pose challenges for cryptocurrency supporters in the nation.

Reforming The Framework

Political campaigns are once again filling the streets across both small towns and large cities in Japan, adding a distinct noise to the crisp October air. However, crypto enthusiasts might be paying closer attention to the campaign messages during the upcoming general election. On October 21st, 2024, Tamaki posted the cryptocurrency tax proposals put forth by the DPP on X, linking to an official document outlining these pledges.

Seeking votes, Tamaki is committed to reforming the current crypto tax framework, which many consider confusing and inequitable. The proposed policy focuses on enhancing NFT utilization in governance, establishing a distinct 20% tax rate for cryptocurrencies (which are currently taxed up to 55% as miscellaneous income), allowing loss deductions, and no longer requiring taxes for crypto-to-crypto transactions.

Mixed Reactions

The campaign also indicates a desire to raise permissible leverage rates for trading and to introduce cryptocurrency exchange-traded funds (ETFs). Tamaki stated the DPP will transform the Yen into a fully electronic currency and encourage local governments to issue a digital local currency (tentative name) as a crypto asset to help revitalize local economies.

While these promises may sound appealing, the reality for many Japanese citizens remains challenging, with inflation and high taxes making it hard for even retirees to manage their finances. The proposed 20% rate still undermines the original appeal of Bitcoin, which aimed to provide assistance to individuals like struggling retirees.

The response has been mixed, as someone commented via X that Japan is trying to survive by squeezing taxes out of its citizens, though others expressed support, relieved at the possibility of finally understanding how to file their taxes.