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| November 15, 2011 |
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| Premier Noda Declared Tax Rate Hike in G20 Meeting |
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Prime Minister Noda told openly November 3 during the G20 Summit held in Cannes, France, that the government was determined to raise the consumption tax rate up to 10% in a few years as a concrete step to rebuild the nation's finance. He declared the surge as part of an international pledge. Hoping to take advantage of external circumstances, he is intended to justify himself to increase the tax rate.
PREMIER USES INTERNATIONAL PRESSURE TO JUSTIFY TAX RATE HIKE
Premier Noda expressed in the summit meeting held in the southeastern city of France: 'in order to improve Japan's financial situation to get it back to the sound path, the government will raise the consumption tax rate up to 10% by the middle of the 2010 decade. Taxation arrangements will be combined with social service programs'. His pledge was incorporated in the action plan of the meeting.
Premier Noda will submit to the Diet's ordinary session early 2012 a bill relevant to the consumption tax which, reportedly, specifies a concrete date and rate of the increase. The bill is based on Article 104, Annex of the Income Tax Act, a product approved by the coalition government of the Liberal Democratic Party and New Komeito.
Prior to presentation of the bill, Premier Noda wanted to express clearly his plan to incite external pressure to fulfill his goal. He had not touched upon the topic at all in his policy speech delivered on October 28. Without sufficient explanation to Japanese taxpayers, he openly showed his policy in the international context as a pledge. People here would not accept his tactic.
Consumption Tax is Typical, Unfair Tax
The consumption tax is characterized by factors that: (1) the poorer pay the more, or its counter-progressive effect hits more bitterly those people with lower income, (2) it affects on every staple item (rice, vegetable, meat and fish) without any alleviation and reduction measures. It is contradictory to a concept of welfare. (3) medium-and-small firms fail to pay tax sum as they cannot afford to manage an increased tax amount in reflecting it on the prices. Individual consumers pay tax, but these firms are corporate taxpayers (45.8% of the fiscal 2008 tax delinquency comes from this sector), and (4) the total sum of 3.3762 trillion Yen (2010) returned to leading exporters through the export-payback system. The consumption tax represents a typical, unfair tax of all.
The ruling Democratic Party of Japan (DPJ) had pledged in the 2009 election that it would not raise the rate in four years, but now it has thrown away their words and told about an increase. Premier Noda is intended to set the date of general elections, in which he will be judged by voters, after the consumption tax bill passes the Diet.
DPJ Government Deceives People
In the single reform package of taxation and social services, employers will enjoy benefits: the bill allows them to use the increased portion in order to pay for the employees' pension plans. The government collects tax money from people, alleviating duties of employers. Taxpayers cannot accept absolutely such a measure.
It is deception. The government explains as if the higher taxes constituted better social services. It pretends to use all amount of 5%-increase of tax money for social programs. Practically, however, only a 1% portion could be allotted to 'improve' public services.
The fiscal deadlock has been produced by two major causes. One is reduction of tax revenue, a consequence of the taxation change of 1989 when the consumption tax was introduced. Meanwhile, people with high income and Big Business have enjoyed tax rate reduction and shrinkage of taxable items. The other is a gigantic waste of tax money thrown into the unnecessary public construction works. The deteriorated fiscal cannot be attributed to the growth in the social expenditure.
The Rich Should Pay More
Unless the government rectifies the tax system and corrects unreasonable expenditure, it will fail to reconstruct the nation's finance as a result of a wrong prescription.
Taxation must be based on the principle of progressive collection in which those who are capable to pay should pay the more. People with high income and Big Business as well as those who have great property should owe the bigger liability. The preferential treatments for Big Business should be revised: the schemes of preparatory fund and reserve for loss should be arranged more reasonably, the collective account settlement system employed by a group of affiliate companies should be rectified and the income tax structure to favor the rich should be abolished. Financial resources should be retained by these measures.
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