Government and ruling party consider raising income tax to fund defense spending from 2027

The government have begun considering raising income tax starting 2027 to cover increase in defense spending. While public backlash is expected, the government believes that stabilizing the financial resources that support defense capabilities is a priority.

The three current security-related documents call for defense spending to be raised to 2% of gross domestic product (GDP) in fiscal 2027. The tax reform outline approved by the Cabinet in 2022 clearly states that income tax, corporate tax, and tobacco tax will be increased to fund this increase.