Be afraid, be very afraid
I was looking for the breakdown of inheritance tax rates in Japan the other day, and stumbled on an interesting news story from 2016.
Basically it's a rumour that the government was considering a couple of new taxes: a 'death tax' and a 'savings tax'.
The death tax (死亡消費税) would be a flat tax on all assets at the time of death. It doesn't seem to be a replacement for inheritance tax, but rather a new additional tax, a bit like the consumption tax. It would apply to all residents of Japan and would affect anyone that died, unlike the current inheritance tax that affects very few people.
The savings tax (貯蓄税) would be a tax of 2% per year on savings over 10 million yen. It seems this is not a wealth tax, but rather a tax on cash savings. The discussion in the article linked above mentions that one of the goals would be to encourage people to invest in stocks or property instead of keeping cash.
Now, neither of these would particularly affect me, but when I first saw this, I read the second tax as a wealth tax and had a small freak-out. Much as I like to snigger at wealthy expats complaining about having to pay inheritance taxes after ten years in the country, a 2% wealth tax would be a game changer for me.
It's funny how we're all happy for other people to pay more tax, but when it's our turn everything is different ;)
My wife and I are planning to live off our investments, and expect to receive maybe 2-3% in dividends every year. A 2% wealth tax would reduce this future income to nothing. We'd be faced with the choice of rethinking our lifestyle completely, or moving to a more investor-friendly country.
Now, I think the chance of either of these being implemented is low (and the chance of a wealth tax is almost zero). This country is already a gerontocracy, with both politicians and voters trending older. I can't see any government taking the risk of proposing something like this.
Still, it's useful to keep all scenarios in mind when making plans. What would you do if a savings or wealth tax was announced? Would it affect you?