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2022 June 29 - July 5 TOP3 [POLITICS]

Shift to ability-to-pay taxation and cuts in wasteful spending will generate tax revenues of 19 trillion yen

July 3, 2022

The Japanese Communist Party has argued that it is possible to increase tax revenues by 19 trillion yen through cuts in wasteful expenditures and putting an end to preferential tax measures for large corporations and the ultrarich.

Eight trillion yen would be obtained through a reform in corporate taxation and putting an end to the preferential tax treatment for large firms and the rich; three trillion yen through income tax reforms, including a tax hike on wealthy people’s share trading; three trillion yen through the creation of new tax rules such as taxation on the rich; and five trillion yen through cuts in the military budget as well as in large-scale development projects and other wasteful, unneeded expenditures.

According to the JCP, the use of the additional revenue of 19 trillion yen would also enable the lowering of the consumption tax rate. In addition, this money can be used to enhance Japan’s medical and public health systems, improve working conditions of care workers, introduce a free school-meal program, halve tuition fees for higher education, and provide support for smaller businesses and farmers. As shown in these examples, the 19 trillion yen in additional tax revenue would help to substantially improve education and social welfare programs.

A decrease in the consumption tax rate will be the most effective way to ease the negative impacts of the ongoing price surge. However, the Liberal Democratic-Komei government, while refusing to do so, intends to cool the general public’s demand for a lower consumption tax by saying, “Social welfare services will need to be slashed if the consumption tax rate is lowered.”

The LDP in the ongoing House of Councilors election campaign claimed, “The consumption tax revenue is vital to fund social welfare programs. The lowering of the tax rate will cause a revenue loss of 11 trillion yen, leading to a 30% cut in funds for social welfare.” On the other hand, the LDP is proclaiming the need to double Japan’s military budget without showing ways to secure the financial resources to achieve this.

In the first place, the consumption tax with its regressive nature imposes a heavier tax burden on lower income persons. The use of the revenue from this tax as funds for social security services is totally inappropriate. Furthermore, the LDP-Komei government has repeatedly increased the consumption tax rate following the introduction of this regressive tax system and promoted cutbacks in social welfare programs.

In order to realize a tax reform that will cast a heavier tax burden on the business circles and the wealthy, a major advance of the JCP, which refuses to accept corporate and organizational donations, in the July 10 Upper House election is necessary.
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