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2013年4月 9日 (火)

消費税転嫁 中小企業の泣き寝入りを防げ

[The Yomiuri Shimbun] April 9, 2013
Don't let small firms get pushed around over consumption tax hike
消費税転嫁 中小企業の泣き寝入りを防げ(4月8日付・読売社説)

To ensure the consumption tax rate increase is smoothly implemented in April 2014 as scheduled, it is essential that small and midsize companies and other entities add the additional amount to their prices.

The government has submitted a bill to the Diet for special legislation that would make it easier for businesses to absorb the higher consumption tax by raising prices.

We urge ruling and opposition parties to cooperate to pass the bill swiftly to create an environment conducive to implementing the tax hike as planned.

When the tax rate is raised, the markup should be passed on through the purchase prices retailers pay, and then eventually paid by consumers.

There are concerns, however, that major retailers such as supermarket chains might exploit their dominant positions in price negotiations and refuse requests to pay the increase in prices at which they buy goods from small and midsize suppliers.

Ban unfair practices

The bill aims to prohibit major companies from abusing their superior positions to refuse higher purchasing prices, and also such illicit practices as agreeing to pay these higher prices only if companies down the chain buy other goods from the larger firms in return.

The legislation would empower the Fair Trade Commission to warn violators to urge them to pass the higher tax on prices. The FTC could make these companies' names public.

The bill would allow smaller companies to form a "price cartel" through which they can in concert pass the tax hike on through their prices to level the playing field in negotiations with large firms.

It is hoped the legislation will prevent companies in weak positions from being forced to silently bend to pressure applied by large firms. The bill rightly includes a range of measures to meet this objective.

According to a Japan Chamber of Commerce and Industry survey, when the consumption tax rate was increased from 3 percent to 5 percent in 1997, two-thirds of businesses with annual sales of 15 million yen or less said they could not pass the tax hike on in their prices.

Intensifying price-cutting competition amid the prolonged period of economic deflation has generated huge pressure on small and midsize companies to keep prices down. If they cannot soak up the higher consumption tax through increased prices, their business conditions may deteriorate all the more.

The tax increase in April next year will be followed by another in October 2015. The bill allows prices of goods and services to be displayed separately from the amount of tax levied on them. This would be handy for smaller companies because they could skip some cumbersome procedures involved in changing their pricing.

Stay out of ad campaigns

One possible shortcoming of the bill is that it would ban retailers from conducting "consumption tax discount sales" and similar advertising campaigns in which prices are lowered by a margin equivalent to the consumption tax.

The government claims the ban will prevent large companies from unfairly squeezing suppliers to cut prices. However, we think the government should not meddle excessively in businesses' advertising campaigns, which should be left to the ingenuity of private firms.

The government will start working out details of how prices should be labeled after the tax is bumped up. Care must be taken to avoid confusion among retailers.

The government should be more concerned about vigilantly monitoring major companies that might refuse to pass the increased tax on through their prices, and to clamp down on illegal practices relating to it.

Ministries and agencies will reportedly set up consultation services with local governments and others at which businesses and consumers can ask about consumption tax issues. They also plan to write reports on compliance with the planned law.

Small and midsize firms, however, are more worried about keeping good relations with business partners than reporting any dishonest practices by their customers. There are fears that losses incurred by smaller firms will stay hidden in the dark.

The consumption tax hike will kick in less than a year from now, and price negotiations are getting into full swing. The government must not overlook any "bullying of subcontractors" by major companies.

(From The Yomiuri Shimbun, April 8, 2013)
(2013年4月8日01時14分  読売新聞)


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