Japan Press Weekly

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2012 February 1 - 7 [POLITICS]

Consumption tax hike may further deteriorate social welfare systems

Akahata on February 7 warned that a consumption tax hike would lead to increasing the number of contingent workers and causing a further deterioration in social welfare systems.

The government argues that a consumption tax hike is necessary to secure and stabilize social welfare systems. However, if the consumption tax rate is increased, corporations will likely strengthen their moves to replace full-time workers with contingent workers.

When companies pay the consumption tax to tax offices, they can deduct the amount of the tax they paid when purchasing goods and using temporary labor and other services from the amount they received in sales. Use of many temporary workers helps reduce the amount of consumption tax paid to tax authorities by corporations.

The more temporary jobs are increased, the more tax money available for social welfare programs will decrease because temporary workers’ annual income is less than that of full-time workers.

The need now is for the government to take measures to create more full-time jobs in order to secure the viability of social welfare systems.