Prime Minister Koizumi gives a cue to discussion on consumption tax rate
increase -- Akahata editorial, December 12, 2001 (excerpts)

Prime Minister Koizumi Jun'ichiro in a breakthrough stated that the
government will start discussing the issue of a consumption tax rate
increase in February 2002.

He said that no specific conclusion should be proposed at the beginning
of the discussion; the reason he gave for proposing being that there are
several target figures for the tax rate increase.

The government White Paper on Economic and Fiscal Policy published on
December 4 said that the consumption tax rate should be increased to 23
percent in order to balance the national finance.

There was another argument, which was not included in the white paper,
that the consumption tax rate should be increased to 8 percent and pensions
should be cut by 20 percent from 2005.

The burden of the consumption tax is heavier for
low-income people. If its rate is increased, these people will have to cut
down further on expenses.

Also for small- and medium-sized businesses, the consumption tax is
troublesome. It's easy for major companies to include the consumption tax on
their product prices, but small- and medium-sized ones can't do the same
thing. Many of them have to pay the consumption tax out of their incomes or
borrowed money.

Ordinary people and small- and medium-sized companies are the hardest hit
by the prolonged economic recession. A consumption tax rate increase will
add to their already serious difficulties.

Why does the government choose the regressive consumption tax as means of
increasing tax revenues? The state minister in charge of economic and fiscal
policy, Takenaka Heizo, said corporate tax should not be increased because
it would weaken major companies' international competitiveness and it's also
impossible to increase income tax because it would deprive the people of
motivation to make more money.

Takenaka even suggested that corporate tax should be decreased. The
consolidated tax payment system to be introduced from next fiscal year will
amount to an 800 billion yen tax reduction for major companies.

The Koizumi Cabinet's "tax reform" sides with the strong and crushes the
weak. Such a tax system reform will help complete Prime Minister Koizumi's
"structural reform" which will further allow the stronger to prey upon the
weak.

Tax revenues have decreased due to corporate tax reductions and tax rate
cuts for higher income groups. The Koizumi "reform" will only help tax
revenues decline further and the economic situation become worse.

The government must start discussing urgent measures to decrease the
consumption tax rate, not to increase it. (end)