Foreign Ministry paid consumption tax knowing it unnecessary

The Foreign Ministry has admitted that a committee for assistance for Russia -- affiliated with the Foreign Ministry -- has made unnecessary payments of the consumption tax to contractors for construction projects on the Russian-held "Northern Islands."

This was in answer to Kijima Hideo of the Japanese Communist Party at the House of Representatives Budget Committee meeting on March 5.

Citing the Foreign Ministry's March 4 report on the findings of the investigation into an interference with the ministry affairs by Liberal Democratic Party Dietmember Suzuki Muneo, Kijima pointed out that the ministry approved the payment of the consumption tax amounting to 268.42 million yen (2.06 million dollars) to the contractors of 84 assistance projects for the "Northern Islands" from 1997 to 2000.

Among the payments, Mitsui & Co. Ltd. received 99.62 million yen (0.77 million dollars), equivalent to the consumption tax levied on a project for constructing diesel generation facilities on Kunashiri Island, one of the four Russian-held "Northern Islands," Kijima said.

The Foreign Ministry report stated that the Assistance Committee office, which it administers, "understood that the consumption tax payment is not necessary for overseas assistance projects."

However, in reply to Kijima, a National Tax Administration Agency official testified that on September 20, 1996, in response to an inquiry by the committee office if the consumption tax be paid for the projects, the agency answered "No."

In reply to Kijima, the Foreign Ministry European Affairs Bureau director admitted that the inquiry was made by the committee, but said that it was impossible to understand why the committee failed to correct the mistake (of paying the money equivalent to the consumption tax).

Kijima emphasized that the Foreign Ministry report was wrong on this point, and said, "It is very serious that as much as 200 million yen had been appropriated." "Such an illegal payment of taxpayers' money by the support committee must be thoroughly investigated and the Foreign Ministry be held responsible for this," Kijima said. (end)