TOYOTA enjoys tax break of 190 billion yen

Japan Press Weekly

Japan Press Service Co., Ltd. is the only news agency providing information of progressive, democratic movements in Japan

TOYOTA enjoys tax break of 190 billion yen

Thanks to generous tax breaks for large corporations, the actual corporate tax rate for Toyota Motor Corp. was just 28 percent instead of 40 percent, according to the automaker’s annual Securities Report for 2007 submitted to the Financial Service Agency.

Toyota’s current profits reached a record high of 1.6 trillion yen in FY 2007, more than double its achievement in 1989 during the economic bubble. In spite of this, its corporate tax burden has been reduced.

The effective rate, the net rate the corporation pays, which includes the corporate tax, the corporate inhabitant tax, and enterprise tax, is about 40 percent at present. Based on this rate, the company should have paid about 630 billion yen, but it actually paid just 440 billion yen.

The largest Japanese automaker is estimated to have received 82.2 billion yen in tax breaks for research and development expenses. In addition, 75.9 billion yen has been cut because taxable income is reduced to make up for losses it incurs from its payment of taxes in foreign countries. It also received a 31.6-billion yen tax break under the dividends-income exclusion system, bringing to a total of 190-billion yen in tax break.

Japan Business Federation (Nippon Keidanren) Chairman Mitarai Fujio calls for the present 40 percent corporate tax rate to be lowered. He insists that shortfalls in tax revenue as a result of tax breaks for corporations should be made up for by a higher consumption tax rate.

Professor at Rissho University Urano Hiroaki says, “The idea of increasing the consumption tax rate to secure funds for social services is being much discussed. But this is a ridiculous mistake.”

He says that any tax should be imposed according to ability to pay. “How self-centered it is for the business community to call for a further cut in corporate burdens on social insurance premiums in addition to the tax breaks!” he said.

Urano said, “Toyota and any other corporations which make record profits must shoulder tax burdens appropriate to their earnings so that resources for social services are ensured.” - Akahata, July 7, 2008