The government announced guidelines to revise taxation and released an urgent economic policy package at the end of last year. The two measures are common in a rule to give priority to the rich and big business while disregard the weak. The administration is bluntly arrogant to the latter, saying that ‘people should be grateful to the government as it gives them tiny shares’.


GOVERNMENT FAVORS THE POWERFUL AND IGNORES THE WEAK


The tax guidelines consist of two policies; expanding the non-taxable limit of gift tax and reducing corporate taxes.


As for the gift tax, steps are taken to (1) extend the non-taxable period on ‘gifts to grandchildren (a fund for education)’ which was introduced in the Fiscal 13, (2) set new non-taxable limits to assist marriage, childbirth and education, and (3) enhance the special support for house-building funds. A unit of 10 million Yen is set for all these measures. The government explains the procedures are taken to transfer assets piled up by the retired, elder generation to the younger ones who need money and to boost consumption, but the steps work only for affluent families. Eventually gaps remain to be fixed among rich and poor families.


Government Marginalizes the Weak


A typical feature is seen in a new policy, the Junior NISA, which is a Japanese version of ISA, or Individual Saving Account, whose N stands for Nippon, applicable to children who are babies and those who are up to 19 years old. The scheme allows tax free status to the qualified saving accounts. Tax is exempted in the accounts over payments of stock transaction profits, if these operations are made in the name of children or grandchildren. Operational profits, reportedly, are not taxable up to 800 thousand Yen a year.


As for corporate taxes, the government reduced the portion of national-level tax on profits by 2.51% in the Fiscal 2015 and by 3.29% in the Fiscal 16 in order to strengthen competitiveness of Japanese firms in the international market. Complementary measures are taken to cover shortfalls by imposing the size-based business tax applicable even to deficit-ridden corporations.


On-going foreign exchange fluctuations drop Yen’s value, which produces sharp contrasts in one industry to another: export-oriented manufactures, including automobile industry, enjoy profits, while firms relying on costly imported raw materials and consumer goods inflict losses ? a hierarchy in which the stronger gain more, while the weaker retreat. Employment is damaged. The economic policy has apparently failed.


The government, however, implements a special economic measure which totals 3.5 trillion Yen. The sum contains various subsidies to bolster local economies, like travel vouchers and tokens, ‘boost consumption’, such as grants for heating oil purchases (distributed only once) and prevent population decrease, like grants to vitalize municipalities. The government mentions beautifully; to increase by 40 thousand people who may move to rural areas from the Tokyo metropolitan zone, to decrease by 60 thousand the number of people who may flow in Tokyo, to create 300 thousand jobs for young people in the provinces and to support their engagement in the agriculture, forestry and fishery sectors, but lacks in concrete steps. It proposes a fund to exempt from repayment of scholarship if a young man/woman finds a job in the native municipality.


Lately more children live in poverty. They need assistance in the same level as that of the Scandinavian countries in school education. Debts must not be conveyed to coming generations. Taxation and finance must be reformed, but not for taking make-shift steps, but for strengthening public sectors, including healthcare, welfare and school education whose budgets were reduced.


A trickle-down theory, by which the government insists that if ‘strong enterprises’ get stronger, the effects impact on performance of medium-and-small-sized companies and on wages of workers, is broken up. Disparities prevail.


Let’s Counterattack in Local Elections!


Local elections are scheduled in April, which is an opportunity of counterattack from our side. It is necessary to build up a mechanism of redistribution of wealth to shrink gaps between the rich and the poor; to enhance a progressive taxation scheme and to impose more taxes on unearned incomes of business and stocks as well as incomes from the transfer of assets. If the public sectors, like healthcare, welfare and education, are properly financed, jobs will be created. Let’s recuperate the public sectors in the municipalities. Let’s take initiative in the labor issues.




January 13, 2015