The consumption tax rate is scheduled to rise to 10% in coming October. It has an extremely regressive nature that impacts cruelly on people’s life. A basic function of taxing lies in collecting taxes from the rich and big businesses in accordance with their ability to pay so that social disparities may be rectified. This is a principal role of taxation. Let’s reflect in the coming elections of the House of Councilors people’s will to cancel another surge of the tax.

LET’S WIN VICTORY IN THE ELECTIONS TO MAKE GOVERNMENT GIVE UP TAX HIKE!

The most controversial aspect of consumption tax is its regressive nature. It is a deadly flaw and cannot be altered by any means.

The tax was introduced in April, 1989, and this year commemorates its 30^th anniversary. Governments and ruling parties have told repeatedly that the consumption tax serves as a financial source for public services and that it would prevent budget deficits from impacting on coming generations, while strong popular movements have been staged since a time when the sales tax was contested. Under these circumstances the government forced to introduce the consumption tax.

Let’s look at tax revenues. In 1989 the total revenue from taxes amounted 55 trillion Yen, while during a period of 30 years from 1990 through 2018 the average sum of tax revenue was approximately 50 trillion Yen. The incoming amount has been declining unquestionably, though economic performance affects on the figure.

As for the corporate tax, it was 42% before the introduction of a consumption tax and has decreased year after year down to 23.2% today. With regard to the income tax, the highest rank was 70% in 1986, but today it is 45%.

During a 30-year period the governments have earned 372 trillion Yen from the consumption tax, while the returns declined from the source of three kinds of corporate tax, accounting 291 trillion Yen. A total of reduced earnings of income tax and residents’ tax have reached 270 trillion Yen. That means the revenue from consumption tax has been used to fill the reduced sum that must have been collected from big businesses and the rich.

Thus, taxation of the nation has lost power of procurement. We live today in a crisis of a nation which relies on taxation.

Principal Rule – Those who are able to pay should pay

Let’s look at breakdowns of tax revenue.

In 1989 when the consumption tax was introduced;

 Income tax         21.4 trillion Yen       38.9%

 Corporate taxes    19 trillion Yen          34.5%

This means the two tax sources occupied 73.4% of the total revenue.

In 2017 the rate dropped to 52.7%, while the consumption tax earnings held nearly 30%.

An estimate says the consumption tax will be the biggest tax resource, exceeding the income tax, when the rate of the former is raised to 10%.

The constitution of Japan demands taxation to comply with a rule that those who are capable to pay should pay, proclaiming fair taxation. It embodies the social right, an ideology to live in peace. The idea is one of the crucial bases that the contemporary constitution requests. The consumption tax is levied on every one of people. And therefore, it violates the constitution, if the government attempts to give this tax a status of a major revenue source.

Other options

Before discussing another surge of the consumption tax, the government should totally abolish the special taxation measures for a time being, and return the rates of　income tax and corporate taxes to the levels which were implemented before the consumption tax was collected. And then, a sincere review should be made on the overall taxation.

Many tasks are left unanswered in the field of taxation amid expanding income gaps and growing dependence on financial transactions in the economy. It is necessary for the government to newly introduce a tax for the rich and a financial transaction tax, and other steps. It is also indispensable to restrict tax haven.

In short, good solutions depend on people’s opinions and a political resolve. Is it all right for the consumption tax to go up? Serious discussions are needed. The scheduled House of Councilors election is a chance for people to show their willpower.

June 18, 2019