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HOME  > Past issues  > 2009 March 25 - 31  > 20 years of consumption tax takes 213 trillion yen from people, gives 182 trillion yen to businesses
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2009 March 25 - 31 [PEACE]

20 years of consumption tax takes 213 trillion yen from people, gives 182 trillion yen to businesses

March 31, 2009
Japan’s fiscal year begins on April 1. This year marks the 20th anniversary of the introduction of consumption tax.

Consumption tax revenues over the 20 year period has reached 213 trillion yen while large corporations have been given 182 trillion yen in tax breaks.

The consumption tax rate was three percent when it was introduced in April 1989 and was raised to five percent in 1997.

Betraying its promise that the consumption tax revenue would be used to improve welfare services, the government has carried out their cutback instead.

In actuality, increases in tax revenues from the consumption tax have been used to make up for the tax shortfalls caused by the tax breaks on large corporations.

The government is now seeking to further increase the consumption tax rate in FY 2011, again on the pretext of the need to improve welfare services.

But the truth is that the government is giving corporations further cuts in corporate taxes and reducing their share of social insurance contributions.

The Japan Business Federation (Nippon Keidanren) calls for further tax breaks for large corporations and proposes that the consumption tax rate be increased as a resource to make up for possible losses in tax revenues.

It even shows an estimate that the resource needed to reduce corporate taxes by 10 percent will be about five trillion yen, which will account for an increase in the consumption tax by two percent.

The regressive consumption tax is levied on all goods, products, and services. In short, it imposes heavier burdens on lower-income earners. The need now is for a more progressive tax system to help warm up household economy, not more regressive taxes that will only discourage individual consumption.

The Japanese Communist Party is opposing a consumption tax hike and calling for an exclusion of food products from the consumption tax.
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