politics

Abe may sweeten sales tax hike with corporate tax cut

42 Comments
By Stanley White and Tetsushi Kajimoto

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42 Comments
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I don't understand, cut corporate tax and put more money in the pockets of the rich and increase consumption tax and take money out of the pockets of the middle and low class. Can't someone explain this please?

21 ( +22 / -1 )

Bakanomics!

16 ( +16 / -0 )

I don't understand, cut corporate tax and put more money in the pockets of the rich and increase consumption tax and take money out of the pockets of the middle and low class. Can't someone explain this please?

They may be entertaining the fanciful notion that companies will pass on the savings to the middle and working classes in the form of wage hikes and hiring more staff.

11 ( +12 / -1 )

Abe is an idiot.

11 ( +15 / -4 )

No no, nothing to explain, you got it... Anyone lucky enough to be in a position high enough will actually see their burden decrease and people who are lower to mid level employees will be the ones to shoulder all the pain... Not much more to it. Happens all around the world, the trickle down never comes, people just live with less, work longer hours with less job security, while business have billions in funds, spend less on personal "luxury" items and take longer to buy cars and homes etc... The opposite of what you need when trying to grow an economy.

9 ( +10 / -1 )

He should hike the tax on a pack of cigarettes.

9 ( +9 / -0 )

In my home country, GST is 15 percent but there are no other sales taxes like Japan. No car purchasing tax apart from GST, no separate pension payments for those who age before you, no health insurance payments( unless private ) and hospital care is for everyone, no asset taxes, no citizen taxes, no tax on sales of a private home.

When GST (goods and services tax) was implimented, income tax was also reduced and all other sales taxes were removed. A tax on goods and services is a fair tax but income tax from a working person's labour is theft. (think about it)

Japanese government thinks you should pay more consumption tax and still hold on to the other taxes which in most cases is the same thing.

7 ( +8 / -1 )

I think the headline should read:

Abe may rub salt into the wounds of consumers by combining sales tax hike with corporate tax cut

There is nothing sweet about that.

7 ( +7 / -0 )

How does taking more money from me and giving it to someone else "sweeten" the tax hike? Given the appalling state of the government's finances there is no room for tax cuts.

6 ( +6 / -0 )

Owens, telling people to go home because they point out something true serves you no credit. GW is right about cutting down waste before increasing taxes. A certain Yukio Hatoyama promised this and failed to deliver. Japan is being run into the ground by the bureaucracies, and Joe average is starting to suffer. The "go home then" line is the reserve of morons.

6 ( +7 / -1 )

This is hardly a sweetener for consumers, although the rate is high compared to other major economies and is one factor that dampens investment here. But for consumers we will see increased taxes, rising prices and no wage increases or higher bonuses for most in the domestic economy. This cannot lead to increased spending, nor to people having more children (future taxpayers). Abegeddon still beckons for most of us.

5 ( +6 / -1 )

Big businesses in Japan already get huge benefits, it's the small/medium sized businesses that are screwed, just like the consumers in Japan are screwed.

5 ( +6 / -1 )

Japan is becoming the next US. Enacting financial policies that take money away from the general public and give it to wealthy ...

5 ( +5 / -0 )

Reaganomics.

4 ( +4 / -0 )

owens,

son you got it ALL WRONG!

Go home ya say, how lame, THIS IS MY HOME comprende? Likely not!

So I CARE, I wish the govt would start doing something RIGHT instead of doing always wrong, I have put in decades in Japan as many others on here have & its maddening to see the country being sent down the crapper, especially when its so unnecessary!

4 ( +4 / -0 )

Japan is similar to the US. They done have a revenue problem, they have a spending problem.

3 ( +5 / -2 )

People will buy only what is necessary and cut down on certain items. People will start to stay at home more and become glued to their TVs. Economic shrinkage will start for consumers which will back up to the manufacturing base. A possibly year long consumer belt tightening will continue but will gradually return .

3 ( +3 / -0 )

sweet for the rich; bitter for the poor. why the hell is it that money is always flowing in the wrong direction, from poor to rich? is that the only way to run a country, to have a successful economy?

i think that if big business executives would give up on buying themselves 3 new porsches per year, to say, only 1 new porsche, then the rich might not need so much money from the poor.

3 ( +3 / -0 )

Saxon Salute - a most succinctly-phrased riposte. "We are going to kick you in the bollocks. It is your duty to pretend this is necessary. If you will not do this, leave these shores."

A Saxon salute is the best such a quisling buffoon merits.

As anyone with half a lobe could have predicted, Abe plans to fund his donors with cuts, and gouge the shortfall from the drones, who are expected to parrot "thank you sir, may I have another."

3 ( +3 / -0 )

taking from one pocket and giving it to the other... there will be no trickle down effect from lower corporate taxes. I thought I am being over taxed in Canada but we've got nothing on Japan!!!

2 ( +2 / -0 )

So how is relaxing corporate tax going to soften the blow of the ordinary man or woman forced to pay higher sales tax? Beggars belief... does he know David Cameron and George Osbourn?

2 ( +2 / -0 )

Owens my friend, I did not mean a personal insult. I only meant that the "go home if you don't like something" approach serves no purpose and is of no credit to the poster. It is a line commonly used on this board and it is the ultimate insult to people who have spent 20-30 years of their life here and love many aspects of the country. I see the line itself as moronic, but I did not mean to infer you are a moron. My apologies.

You're right, Abe is not reading this, but I personally know those in his ministries who are paid to monitor Japan-related media. Abe has announced some future cuts in the bureaucracy in fact, but few of us have any faith that this will ever happen. Abe tries to claim that a hike in sales tax will be sweetened by a cut in corporate taxes, but that is not a sweetener. "We will tax you more highly and remove more of your money, but we'll give some of it to your overlords" is hardly a sweetener.

2 ( +4 / -2 )

if they were cutting income tax too...

1 ( +1 / -0 )

No one here will understand what it's like to run a business and pay out a huge amount of tax every year, so I shouldn't bother commenting, but it would totally help us hire 1-2 new employees if the corporate tax rate were going to be lighter. Note that this is only a tax on profits. Last year only 30% of the companies in our city were profitable, according to our accountant, and some of those were cooking the books to show profit so banks would keep loaning them money.

1 ( +5 / -4 )

Sweetens the deal for WHOM, pres tel? My family? Nope. Lower my better half's income? Nope. So basically this will make execs say yes to tax the poor further. The apple does not fall far from the tree, Abe, when it comes to your roots and what you are doing to the people here. What euphemisms do you suggest for this time around?

1 ( +3 / -2 )

The Gini coefficient has been increasing in Japan over the past decade or more. This is just a further example of neoliberal economic policy that reflects class warfare.

1 ( +1 / -0 )

No one here will understand what it's like to run a business and pay out a huge amount of tax every year, so I shouldn't bother commenting

I own a business here, and I pay a lot of taxes. I have in fact paid more taxes every year that my business has been in existence.

That's because our yearly sales have increased every year, and that has increased my own personal income every year accordingly. My personal salary for the 2013 fiscal year is a full 30% higher than it was in the 2010 year.

That's the point so many business owners who like to complain about taxes conveniently skip over. If you are paying more taxes, it's because your balance is further in the black than it previously was.

Corporate taxes cuts while increasing the sales tax just increased the burden on the little guy - typical Japan.

1 ( +3 / -2 )

Is this what the IMF meant by "reform"?

Maybe Bruce can fly in on his X-71, fix Fukushima and the economy in 151 MINUTES

0 ( +0 / -0 )

For christs sake abe you TWIT, this is what you must do FIRST as I have been saying for years now:

CUT ALL MINISTRIES budgets by 15% right off the top, 20% for construction, finance & foreign ministries because those 3 are simply criminal organizations point blank!

Do this, make the bums who supposedly work in Nagatacho decide which programs get cut, ie do your damned jobs!

After this THEN we can look at raising consumption tax!

At the same time local govt also MUST cut their budgets by 15% my frigging resident taxes are out of sight! These bums in local govt must reign in their hugely wasteful ways!

Do the above because the people of Japan are MAXED out with all these insane different taxes!

Its govt/bureaucrats that are bankrupting Japan.

Oh & one more thing, around 70% of companies in Japan typically PAY NO TAXES & this BS has been going on for decades! Has to stop, TAX OFFICE get off your butts & start REALLY auditing Japan Inc they are hiding & falsifying accounts on a massive scale & the Tax Offices do next to nothing about it!

0 ( +2 / -2 )

Exempt food and medicine from the sales tax and it may be doable.

0 ( +0 / -0 )

The time for Japan being timid in pursuing its national interest is over. Before engaging in tax reform, Japan needs to push the chess piece that the Swiss National Bank chose in September 2011 when the SNB stated unequivocally to markets that it would not permit 1 Swiss franc to be worth more than 0.83 pounds (SFr 1.20 to the Euro). More specifically, Abe and Kuroda need to state unequivocally to markets that for the next 5 years, Japan will not permit the Yen to strengthen more than 100 Yen to the US Dollar; and that if the success of Abenomics requires it, they will produce a still weaker yen.

Such a stand will produce the following benefits: First, most Japanese firms have based their earnings estimates on the assumption that dollar/yen will trade between 91 and 95. Creating certainty that dollar/yen will not be weaker than 100 will permit these firms to raise their earnings estimates and plan domestic infrastructure/investment projects with certainty that the worst case scenario for their profit projections can be calculated using dollar/yen of 100. Due to the market’s expected rate of dollar/yen equilibrium closer to 105, this cutting off of the higher end of the current dollar/yen volatility range below its expected equilibrium price, Japan would avoid the UK’s September 1992 mistake and thus limit its action to diminishing the range of volatility while demonstrating respect for the course of long term currency flows. Consider the value of Draghi’s verbal intervention when he stated that he would do “Whatever it takes” and that “It will be enough”. Market participants holding European policymakers hostage via the credit-default swap market, sovereign debt yields, and equity shorts were tamed such that they came to understand the merit in the mantra “Don’t fight the Central Bank”. Since then, they have been compliant, and the efforts of European policymakers to achieve their aims have been facilitated. In like manner, Japan too needs to make the analogous announcement in order to convert markets from foe to friend to the success of Abe and Kuroda.

-1 ( +0 / -1 )

marcelitoAug. 14, 2013 - 09:38AM JST

timtak - thats true and thats the argument LDP has been using to push the sales tax increase - that the rate is much higher in some other countries...of course they conveniently forget to mention that a lot of those countries don,t have the same high levels of other taxes that we pay here in Japan...( not just income tax but things like city tax, health insurance, shaken / car tax etc etc...)

Exactly.... and if you're a double income family those other taxes, which are paid independently of being a family unit make Japan a high tax country.

-2 ( +0 / -2 )

Sweetens the deal for WHOM, pres tel? My family? Nope. Lower my better half's income? Nope. So basically this will make execs say yes to tax the poor further. The apple does not fall far from the tree, Abe, when it comes to your roots and what you are doing to the people here. What euphemisms do you suggest for this time around?

Hate the game, not the playa, homeslice.

-4 ( +1 / -5 )

Decreasing corporate tax is not just about the simplistic view of offsetting the increase in sales tax. The negative factors with increasing the sales tax is obvious to everyone including the Government but it needs to be done to appease foreign opinion of Government debt to prevent the degrading of JGB's in the short term and to decrease the reliance on issuing more bonds in the longer term. Although decreasing corporate tax has the benefits of cultivating the corporate environment to increase wages and increase investments, it also stimulates the attraction of investing in Japan by foreign entities. This directly addresses the aging population issue by increasing the foreign population and increasing overall demand. That is exactly how Singapore has addressed their decreasing and ageing population to make it the richest country per capita in the world form a third world country in a very short period of time.

-4 ( +0 / -4 )

http://www.mhlw.go.jp/english/wp/wp-hw3/dl/1-31.pdf

Total taxes as a percentage of National Income-23%. Quite low.

The proposal to increase consumption tax is to lessen the burden of JGB on social security costs. Their goal is to match the consumption tax revenue to the said social security cost.

-5 ( +0 / -5 )

Owens, telling people to go home because they point out something true serves you no credit. GW is right about cutting down waste before increasing taxes. A certain Yukio Hatoyama promised this and failed to deliver. Japan is being run into the ground by the bureaucracies, and Joe average is starting to suffer. The "go home then" line is the reserve of morons.

Obviously you missed my entire point. I don't care if he is "right" or not? I was attacking his tone. And you attack me with personal insults? Stick and bones, my boy.

-5 ( +0 / -5 )

Ok, then perhaps you should take all your knowledge and wisdom, get elected, and solve the worlds problems. You obviously have all the answers. Go get 'me, Tiger!

-6 ( +0 / -6 )

It seems many posters here spout the low brow rhetoric of unions and left leaning politics. Saying how the corporate tax will help the decrease rich and the sales tax increase will hit the poor (or middle) class.

A sales tax hike will impact everyone and the more you consume, the more it will impact you. Therefore one can reasonably assume that those with the highest incomes (extravagant lives) will pay substantially more sales tax than lower income earners. This tax goes to the government to be spent on services for all (or pay down the massive debt created for historical funding). It would be interesting to see statistic to show just how much the sales tax income from higher income earners subsidises the poorer masses.

And lowered corporate tax rates help the company accounts. No necessarily any specific rich person in the company. Assuming a company is profitable for the year, a corporate tax decrease will immediately leave more profit in the company, not in a person's pocket. Now, that company is likely to use that extra profit to reduce debt, purchase or upgrade assets, expand the business, pay a bigger bonus, increase salaries or hire new staff. Yes, the top managers could write themselves big cheques but in the vast majority of companies, they will use profit sensibly to maintain and build the business.

So my view is that Japan has to increase the sales tax and those that spend (consume) more will be the biggest contributors. And reducing corporate tax will have a positive impact on jobs, wages and business expansion.

-7 ( +2 / -9 )

Japanese sales tax is comparatively low (average 8% in the USA, and about 20% in Europe), and corporate tax is comparatively high 38% (not sure about USA, about 20% in Europe). http://en.wikipedia.org/wiki/Tax_rates_around_the_world#List

-8 ( +6 / -13 )

For christs sake abe you TWIT, this is what you must do FIRST as I have been saying for years now:

He doesn't read this forum, homes. He didn't get the message. Try writing a letter.

Or, go back to your home if you hate it so much. Relax. You have options. Think it through.

-8 ( +0 / -8 )

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