The new minimum tax would be set at 22.5% of income after the first ¥330 million. If this tax amount exceeds what would be paid under the standard tax, the difference would be collected.

The proposal aims to correct a typically sharp decline in people’s tax burden once their income exceeds ¥100 million. Critics have argued that the current tax structure is unfair to those with lower incomes.

The ruling coalition will include the new minimum tax in the proposed tax code changes for the next fiscal year, which is expected to be finalised as soon as this week. The new tax could go into effect in 2025 following a grace period.

The new minimum tax would affect an estimated 200 to 300 earners in Japan. For those making at least ¥5 billion, the tax burden would increase by 2-3%.

Japan’s progressive income tax has a top rate of 45%. But income from sales of stocks and real estate is taxed separately at 15%. Many wealthy individuals have high proportions of such lower-tax income.

People earning more than ¥5 billion to ¥10 billion a year have an effective tax rate of 17.2% on average, according to Japan’s ministry of finance. That number includes both income tax and social insurance contributions. The effective rate for those making more than ¥2 billion to ¥5 billion stands at 20%.

Meanwhile, those earning more than ¥50 million to ¥100 million pay an effective tax rate of 28.7%.