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HOME  > Past issues  > 2010 January 27 - February 2  > Is consumption tax hike only way for well-beeing?
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2010 January 27 - February 2 [POLITICS]

Is consumption tax hike only way for well-beeing?

January 29, 2010
In the 2009 general election, the Liberal Democratic and Komei government was removed after attempting to impose heavier financial burdens on ordinary people. In defiance of this voter verdict, the LDP is urging the present government to increase the consumption tax rate and the Hatoyama Cabinet is showing a favorable response.

Without increasing the consumption tax rate, is it impossible to secure sufficient revenues?

The Japanese Communist Party continuously states that if the government cuts military expenditures and ends the present taxation system in favor of only large corporations and the wealthy, it will be able to obtain enough tax revenues without a consumption tax increase.

Let’s briefly look at tax breaks for stock deal profits.

Under the global economic downturn, governments of the U.S. and European nations plan to revise their preferential securities tax system benefiting the wealthy.

In the U.S., at present, people have to pay a maximum 15% of the federal tax for more than $33,950 (about 3.2 million yen) in profits from shares. The Obama administration is considering increasing the tax rate by another 5% from 2011.

The British government decided to increase the maximum income tax rate to 50% and the tax rate on more than 5.2 million yen in dividends to 42.5% from the current 32.5% this year.

In France, the maximum dividend tax rate is 52.1%.

In contrast, the Japan’s current tax rate on securities sales and dividends is 10%, an internationally low level. The Japanese government in 2003, in response to a proposal by business circles, halved the tax rate from the original 20% as a corporate bailout measure to respond to the recession.

Although the Hatoyama Cabinet finalized the taxation system reform plan late last year, it avoided targeting the preferential securities tax system.

The government would be able to increase tax revenues by 700 billion yen by raising the maximum rate for income and inheritance taxes and by 700-800 billion yen by ending the preferential securities tax breaks. It is necessary to levy more taxes or at least levy the previous rate of tax on the wealthy.
- Akahata, January 29, 2010
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