June 22, 2009
The government and the ruling parties are expected to approve this week the basic economic policy for 2009. Its main focus will be on a consumption tax increase.
The Liberal Democratic and Komei parties in the current session of the Diet bulldozed through a law that includes a provision that a bill to increase the consumption tax would be enacted by FY 2011. The draft of the basic policy makes it clear that the plan to increase the consumption tax rate will be implemented in a steady manner.
At a meeting of the Council on Economic and Fiscal Policy, an advisory panel to Prime Minister Aso Taro, Toyota Motor Corp. President Cho Fujio and other business leaders presented the panel with an estimate that the consumption tax needs to be raised to seven percent from the present five percent if the nation is to reduce the nation’s debt in relation to gross domestic product.
Thus, the consumption tax increase is high on the agenda of the LDP-Komei government.
They cite rising costs for social services as pretext
The ruling parties say, “A consumption tax increase is necessary for strengthening the functions of social services.” However, the business leaders’ forecast assumes that revenue from the increased consumption tax will be used to pay debts which have been accumulated because the government generously helped large corporations and major banks make up their losses as well as because of misgovernment.
A member of the advisory council from the private sector clearly stated this in its November 2008 meeting that discussed a mid-term program for tax reform. He said, “If the government can win public agreement to pay more for mending social services, it will mean getting public support for the need to pay more for fiscal reconstruction.”
The mid-term program states that the tax reform might consist of consumption tax increases and an effective corporate tax cut. It is clear that the aim of increasing consumption tax revenue is to make up for losses that will arise from tax breaks for large corporations.
Finance Minister Yosano Kaoru has made it clear that the budget for the next fiscal year should maintain the policy of cutting the annual cost-of-living increase in the expenditure on social services by 220 billion yen. How contradictory it is for the government to call for “the functions of social services to be strengthened” while continuing cutbacks in funding which have brought about a collapse of medical and other social services!
Referring to the annual 220 billion yen cut at a news conference on June 9, Yosano candidly said, “I do not think we are cutting social services funding.” The government and ruling parties seem unable to understand that the public is experiencing hardships.
So, they are using the call for the functions of social services to be strengthened as the pretext for forcing the public to pay more in the consumption tax.
Increasingly, the regressive consumption tax means forcing young people, the elderly, and single-parent families to shoulder particularly heavy burdens even after experiencing severe hardships under the so-called “structural reform” policy. It is clear that raising the consumption tax rate is the last thing that should be done to secure the fiscal sources for social services.
In order to ensure revenue sources, it is necessary to make income redistribution more equitable by increasing the tax rate on capital gains and stock dividends and doing away with excessively generous tax breaks for large corporations.
Democratic Party leader also pleads for corporate donations
A weak-kneed attitude toward major corporations is not just what the ruling LDP is about. The Japan Business Federation (Nippon Keidanren) held a meeting in early June to “discuss policies” with the Democratic Party leader. It is an opportunity for the business organization to assess the policies of political parties and determine the amount of donations to them. Hatoyama Yukio, DPJ president, attended the meeting for the first time in three years.
In that meeting, the DPJ promised Nippon Keidanren to make an effort to raise the consumption tax rate step-by-step, and that the effective corporative tax rate will be lowered to a level similar to other ‘developed’ countries.
Business leaders are taking the initiative in calling for increasing the consumption tax and cutting corporate taxes. If political parties depend on corporate donations, they cannot contradict business leaders and must work within the framework set by the business sector. - Akahata, June 22, 2009
At a meeting of the Council on Economic and Fiscal Policy, an advisory panel to Prime Minister Aso Taro, Toyota Motor Corp. President Cho Fujio and other business leaders presented the panel with an estimate that the consumption tax needs to be raised to seven percent from the present five percent if the nation is to reduce the nation’s debt in relation to gross domestic product.
Thus, the consumption tax increase is high on the agenda of the LDP-Komei government.
They cite rising costs for social services as pretext
The ruling parties say, “A consumption tax increase is necessary for strengthening the functions of social services.” However, the business leaders’ forecast assumes that revenue from the increased consumption tax will be used to pay debts which have been accumulated because the government generously helped large corporations and major banks make up their losses as well as because of misgovernment.
A member of the advisory council from the private sector clearly stated this in its November 2008 meeting that discussed a mid-term program for tax reform. He said, “If the government can win public agreement to pay more for mending social services, it will mean getting public support for the need to pay more for fiscal reconstruction.”
The mid-term program states that the tax reform might consist of consumption tax increases and an effective corporate tax cut. It is clear that the aim of increasing consumption tax revenue is to make up for losses that will arise from tax breaks for large corporations.
Finance Minister Yosano Kaoru has made it clear that the budget for the next fiscal year should maintain the policy of cutting the annual cost-of-living increase in the expenditure on social services by 220 billion yen. How contradictory it is for the government to call for “the functions of social services to be strengthened” while continuing cutbacks in funding which have brought about a collapse of medical and other social services!
Referring to the annual 220 billion yen cut at a news conference on June 9, Yosano candidly said, “I do not think we are cutting social services funding.” The government and ruling parties seem unable to understand that the public is experiencing hardships.
So, they are using the call for the functions of social services to be strengthened as the pretext for forcing the public to pay more in the consumption tax.
Increasingly, the regressive consumption tax means forcing young people, the elderly, and single-parent families to shoulder particularly heavy burdens even after experiencing severe hardships under the so-called “structural reform” policy. It is clear that raising the consumption tax rate is the last thing that should be done to secure the fiscal sources for social services.
In order to ensure revenue sources, it is necessary to make income redistribution more equitable by increasing the tax rate on capital gains and stock dividends and doing away with excessively generous tax breaks for large corporations.
Democratic Party leader also pleads for corporate donations
A weak-kneed attitude toward major corporations is not just what the ruling LDP is about. The Japan Business Federation (Nippon Keidanren) held a meeting in early June to “discuss policies” with the Democratic Party leader. It is an opportunity for the business organization to assess the policies of political parties and determine the amount of donations to them. Hatoyama Yukio, DPJ president, attended the meeting for the first time in three years.
In that meeting, the DPJ promised Nippon Keidanren to make an effort to raise the consumption tax rate step-by-step, and that the effective corporative tax rate will be lowered to a level similar to other ‘developed’ countries.
Business leaders are taking the initiative in calling for increasing the consumption tax and cutting corporate taxes. If political parties depend on corporate donations, they cannot contradict business leaders and must work within the framework set by the business sector. - Akahata, June 22, 2009
