Size-based taxation system will only benefit major corporations -- Akahata editorial, July 1 (excerpts)

The Koizumi cabinet is accelerating its pace to introduce a new size-based taxation system as part of business income tax, which will mean a drastic tax increase for small- and medium-sized companies in Japan.

Currently, corporate tax is levied on the amount of business income of each corporation. However, the size-based tax system, if introduced, will cut by half the income tax rate, and assess tax on the outward form of business management, the major part of which is labor costs.

In his related instruction, the prime minister stated, "Vitalizing corporate activities is the key to strengthening Japan's economic competitive power and creating new jobs in the face of globalization." Is this true?

Starting the new tax system will "activate" only major corporations already enjoying high profits.

For all deficit-ridden companies, most of which are smaller companies, this means nothing but a tax increase.

According to a survey of its 3,000 affiliates by the Chamber of Commerce and Industry, over 80 percent of them in the black will have to pay more taxes under the new system.

This means tax reductions for Toyota Motor Co., Sony Corp., and other major corporations with strong international competitive power. On the other hand, for smaller businesses, most of them are actually in the red and heavily dependent on revolving funds, meaning a life or death matter.

Approximately 80 percent of Japan's employees are working at small- and medium-sized companies. And if such companies are weakened by the new tax system, Japan's economy will fall into further insecurity in terms of employment, family budgets, and regional economies.

Also, smaller businesses have greatly contributed to developing industrial technology in Japan. Therefore, enforcing the new tax system will result in deteriorating Japan's economic competitive power in the world.

To recover Japan's economy, the need now is for Japan to shift to a policy of supporting smaller businesses as a main force guaranteeing jobs and income, and to correct the current tax rating system favorable to large corporations. (end)