The Nihon Keizai newspaper reports that the land ministry is seriously “studying” yet another housing-related tax reform that will effectively increase the tax exemption for inheritances from parents to children if the inheritance is used to buy/build a home or reform an existing home. Currently, up to ¥6.1 million of an inheritance is exempt from tax if it is used for housing. The ministry wants to increase it to ¥20 million.

It will definitely be an uphill battle, what with the new administration making dedicated budget cuts to pay for its more progressive policies. With tax revenues predicted to drop even more in the next year, asking for another tax cut may be too much to hope for. Moreover, the current ¥6.1 inheritance exemption was implemented only in the last year as part of the current budget, and it obviously did not have the effect that was hoped for. As of August, only about 40 percent of the funds earmarked to pay for the inheritance tax exemption had been “used,” meaning that the real objective of the cut–to stimulate sales of homes–wasn’t  being achieved.

What this points to is a refusal by the government, in particular the bureaucrats involved in taxation and housing policy, to recognize that it is no longer feasible to stimulate the moribund economy by concentrating on home sales. The market isn’t the same as it used to be. Some commentators are even saying that if the government wants to use housing as a stimulus they’d have better luck working on rental housing, but that’s beyond the pale for the folks in Nagatacho, who have never taken renters seriously at all.