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2015年9月12日 (土)

消費税10%対策 国民への配慮を欠く財務省案

The Yomiuri Shimbun
Shun benefit payment that slights the public / LDP, Komeito should aim for lower tax rate
消費税10%対策 国民への配慮を欠く財務省案


On top of having little effect to alleviate the public’s sense of pain in paying taxes after an increase in the consumption tax rate, the current proposal would most likely force people to bear needless burdens. A system replete with flaws should never be adopted.

The Finance Ministry has presented to the ruling coalition parties’ tax system reform consultative council a draft the ministry touts as a plan aimed at easing the public’s burdens when the consumption tax rate is raised to 10 percent. The scheme is designed to impose a 10 percent tax on all purchases by consumers and pay back benefits to them at a later date an amount worth 2 percentage points of the tax payments levied on food and beverage items, except alcoholic beverages.

Under this plan, there could be no lowering of payments at the time of purchases, meaning it would play no role in preventing spending on consumption from falling. The ruling parties should turn down the ministry’s draft, and introduce instead a reduced tax rate system in the true sense of the term to ensure tax rates on daily necessities such as food are kept down.

Shabby dole-out policy

The Finance Ministry describes its tax burden alleviation measures as a “Japanese version of a reduced tax rate system.”

Skeptical views were voiced one after another at the coalition parties’ consultative panel meeting on Thursday, such as that the idea put forth by the ministry should be deemed at best a “pseudo-reduced rate method.” This is because applying the same tax rate on all goods and paying cash later to the public is nothing but a government benefit measure.

Bunmei Ibuki, who is a former finance minister and an authority on taxation affairs, at a meeting the same day of the Liberal Democratic Party’s Nikai faction — led by party General Council Chairman Toshihiro Nikai — harshly criticized the ministry’s plan, saying it is “an idea disgraceful for the Finance Ministry, as it could amount to a dole-out measure like a welfare benefit.”

In their common electoral pledge for the House of Representatives election in December 2014, the LDP and its ruling coalition partner Komeito did commit to introducing a reduced tax rate system at the time of the consumption tax being hiked to 10 percent. Should the ruling parties adopt the ministry’s draft and insist obstinately that it should be considered a form of reduced tax rate formula, that would be tantamount to duping the public.

The ministry’s draft calls for setting no limits on incomes for eligibility for receiving the benefits, with a view to having the benefits paid to people in all income brackets, including high-income persons. At the same time, the ministry is poised to set a cap on the benefits at around ¥5,000 a year per person.

When the government raised the consumption tax rate to 8 percent in April 2014, it used what the government referred to as a “plain benefit measure” of lump-sum payouts ranging from ¥10,000 to ¥15,000 per person among low-income people, but that measure failed to produce any tangible effect in shoring up the economy. The ministry-proposed benefit measure would have an even lesser impact.

Likewise, little effect could be hoped for from the ministry-envisaged plan in mitigating the sense of burden on low-income earners.

No help for less well-off

Many members of the ruling parties’ tax system panel also expressed skepticism about whether it was realistic to use My Number ID cards to calculate the amount of consumption tax on purchases of food and beverages.

When making a purchase at a shop, a consumer will hold their card up to an ID card-reading terminal unit. This purchase information will then be collected at a newly established “center for accumulating data on reimbursement.” The consumer will then either go down to the tax office or elsewhere or apply online for the benefit payment.

The consumption tax rate is scheduled to be increased to 10 percent in April 2017. Will it be possible to ensure terminal units are installed at every single one of the estimated 800,000 retailers and food outlets across Japan by then? Even the distribution of My Number cards might not be completed at that stage.

Each terminal is expected to cost tens of thousands of yen to purchase and install. Making sure that the payment system stretches across the entire nation also will entail other costs. Maintaining and managing the new data center, bank transfer fees to be paid when remitting benefit payment, and the labor costs of employees in charge of this work are just some of the factors that will create a new financial burden.

At the panel meeting, a member of the Liberal Democratic Party who had misgivings about the benefit payment system likened it to the building method that caused the construction costs of the New National Stadium to balloon. “We must not allow this to become a second case of ‘keel arches,’” the member said, referring to the gigantic arches envisaged to support a retractable roof at the stadium.

Another panel member pointed to the complications involved in getting consumers to use the system, and wondered whether it is realistic to expect every resident to carry their My Number card every time they go shopping.

Many people are also concerned that their personal information could be leaked or unlawfully used if the cards are lost or stolen.

At a press conference, Finance Minister Taro Aso said: “If people don’t want to carry their cards, they don’t have to carry them. They will just miss out on the reduced tax by that much.” It appears Aso does not understand at all the true sentiment of people who are having a tough time managing the household budget.

Some elderly people and others who would want to get the benefit payment have not mastered the use of personal computers and smartphones. We think a reduced consumption tax rate that does not impose any unnecessary trouble on people would be a fairer, simpler system for everybody.

Learn from Europe

The Finance Ministry’s reasoning for avoiding the introduction of a lower tax rate on some items is that it would be difficult to draw a line between items subject to the lower rate and those that are not, and that having several rates would generate a heavy administrative burden when compiling invoices where tax amounts are entered for every transaction.

Selecting items to be subject to a lower tax rate would indeed require considerable time and effort. But adjusting the advantages and disadvantages of the tax system and making it realistic is precisely the primary duty of politics.

Major countries in Europe have implemented lower tax rates on some items for more than half a century.

These lower rates are imposed on food and also newspapers and books, which are essential for preserving the culture of the printed word. Concerns over invoices have not hindered commercial transactions in any way in these nations.

There is no reason why today’s Japan could not implement such a system.

(From The Yomiuri Shimbun, Sept. 11, 2015)Speech


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