Japan Press Weekly

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2021 December 8 - 14 TOP3 [POLITICS]

JCP Tamura: tax cuts for large businesses in exchange for pay hikes turn out to be ineffective

Japanese Communist Party Vice Chair Tamura Tomoko in her interpellation at the Upper House plenary session on December 10 took up the issue of the Kishida government's "wage boost" policy under "a new form of capitalism".

She said that the government policy focuses on giving tax breaks to corporations that increased their employees' wages, and that "tax cut" measures have been taken since fiscal 2013 and the amount of the tax breaks totals more than two trillion yen. Compared to 2012, an average annual income of workers in 2020 increased by only 45,000 yen in nominal terms and decreased by 224,000 yen in real terms, which means that the tax-cut measure in exchange for wage increases is ineffective, according to Tamura.

She continued to say that 44.2% of the two trillion yen were for large corporations, and that Toyota Motor alone, for example, received 35.9 billion yen in tax breaks. She called into question the need to implement the tax-break measure for large corporations where huge amounts of internal reserves have been amassed, demanding that the government strongly request them to use their internal reserves to raise their workers' wages.

Tamura also demanded that as a step to ensure substantial wage hikes, a direct hiring stipulation be included in new labor legislation. She stressed the need to legally regulate the use of temporary agency workers and short-term contract workers, saying that their use should be limited only to temporary work.

She pointed out that the national average of minimum hourly wages increased by only 193 yen over the past ten years, demanding that the government provide direct support to small- and medium-sized enterprises so that a minimum hourly wage of 1,500 yen will be implemented across the board in Japan.

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Asked by reporters in the Diet building for comments on the FY 2022 tax reform decided on by the ruling parties on the same day, Tamura criticized the reform for shelving the effort to correct the unfair mechanism which in effect lowers corporate taxes for businesses with an annual income of more than 100 million yen.

In contrast, the reform gives a boost to the tax-cut measure for corporations if they raise their employees' wages. "However," she said, "such tax breaks are not necessary for large corporations in the first place because they have a great deal of internal reserves. The role the government should play is to urge them to use just a portion of their reserves for wage increases."

Tamura pointed out that tax cuts in exchange for pay raises began in 2013, but workers' real earnings actually fell in 2020. She said, "The tax-cut measure benefitted only large corporations. The important thing is for the government to support SMEs which do not have enough internal reserves to increase their workers' wages."