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HOME  > Past issues  > 2010 June 30 - July 6  > Kan keeps making excuses for calling for consumption tax increase in debates between party leaders
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2010 June 30 - July 6 [FINANCE]

Kan keeps making excuses for calling for consumption tax increase in debates between party leaders

July 5, 2010
NHK and several commercial TV networks on July 4 televised the debate between political party leaders covering key issues in the ongoing House of Councilors election for the first time after the official start of the election campaign.

Prime Minister Kan Naoto (ruling Democratic Party of Japan President) during the debate repeatedly made excuses in response to criticism from Japanese Communist Party Chair Shii Kazuo regarding his call for a consumption tax increase.

Shii pointed out that 15 percent cut in the corporate tax based on the demand from business circles as well as the plan drawn up by the Ministry of Economy, Trade and Industry will result in a nine trillion yen loss in tax revenues, and that the 11 trillion yen increase in tax revenues from a five percent increase in the consumption tax will be used to cover this loss and not used to fund social welfare programs as being claimed and thus cannot in any way contribute to reconstruction of the economy.

As for a nine trillion yen shortfall in tax revenues due to a cut in the corporate tax rate, Kan said that the JCP calculation is based on the level of tax revenues when the economy was in an upturn and corporations paid more taxes than now.

Shii explained that the government states that it will achieve a three percent growth in Japan’s nominal GDP and that this is where the figure of nine trillion yen comes from.

Kan then brought forward another idea to maintain corporate tax revenues. He said that he will increase areas of corporate taxation.

Shii argued that even if more areas are taxed, the increase in revenues will be just hundreds of billions of yens, far from covering revenue shortages.

In the end, Kan just repeated the claim that Japan’s corporate tax rate is too high or that Japan will face a public finance crisis like Greece.

On the NHK program, a facilitator in response said to the statement by Kan, “The consumption tax will be increased while the corporate tax will be decreased. This means that the DPJ-led administration direction in government policy is pro-business and not directed toward putting priority on household economy, doesn’t it?”
- Akahata, July 5, 2010
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