Fumio Kishida, policy chief of Japan's ruling Liberal Democratic Party (LDP) and former foreign minister, raises his fist with his fellow lawmakers after announcing that he would participate in the LDP leadership election to choose a successor of Prime Minister Shinzo Abe, in Tokyo on Tuesday. Photo: REUTERS/Issei Kato
politics

PM candidate Kishida cautious about cutting sales tax

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"Cutting the tax rate would burden small and midsize companies with additional costs" such as adjusting their cashier systems to adapt to a new tax rate, he said

It would be tax deductible and the cost is not significant when you consider the over all situation, but then this is the logic of a person in govt in Japan so what clue would they have about anything.

And i know some of you are thinking many small and medium size business dont pay tax anyway but.... everyone would rather have less tax and everyone knows it !

Everyone pays tax at the cash register though !!

11 ( +12 / -1 )

"Cutting the tax rate would burden small and midsize companies with additional costs" such as adjusting their cashier systems to adapt to a new tax rate, he said.

This guy is not the guy if he can't even try to think outside the box. Types likes these suck air through teeth then say muzukashii desu nee.

12 ( +13 / -1 )

Japanese study abacuses in school, so reducing tax to 5% is child’s play.

7 ( +8 / -1 )

@Goodlucktoyou,

You would have thought so but I can't remember the number of times I have been standing in line at Daiso only for the customer in front of me having no idea what X number of items plus 10% was making me and the others in line have to wait for what seems like forever.

6 ( +6 / -0 )

Kishida said he can show strength in the areas of economics and foreign policy and that he wants to be a leader who listens to the people.

People say that they do not want to pay consumption tax, but he is not listening. So much for his miningles statement about wanting to listen to the people....

8 ( +9 / -1 )

He's not cautious about. He just flatly won't do it. It's not in the interests of Nippon Kaigi/Japan Inc.

7 ( +9 / -2 )

It's so funny, his own words tell the tale of a man with no idea about the populations plight. If you want to follow him off a cliff into the sea, he of course will be to the side tieing his shoe lace.

4 ( +6 / -2 )

Nippon Kaigi but moderate. Japan has more serious problems than sales tax, but whatever...

5 ( +6 / -1 )

The sales tax is a source of revenue to pay for Japan's social welfare burden...

That's not even true. For example, the GPIF doesn't "pay for" the pension system, as the fund consists almost entirely of securities, which are held for investment purposes and not for the purpose of making cash payments to pensioners.

Through spending, Japan's govt and central bank issue the currency, the yen, that "pays for" social welfare. It doesn't need to collect any of that money back from the public in taxes unless to control inflation or address income inequality.

Let's have a PM that understands how public finance works.

4 ( +7 / -3 )

If the LDP lets the economy disappear down the toilet during Japan's tough winter months because they mismanaged this pandemic, the people will cut them. The pampered politicians play with the consumption tax at their peril when people face dire straits and their livelihood is jeopardized beyond the tipping point.

3 ( +4 / -1 )

"Cutting the tax rate would burden small and midsize companies with additional costs" such as adjusting their cashier systems to adapt to a new tax rate, he said.

increasing the tax rate further would burden small and midsize companies with additional costs such as adjusting their cashier systems to adapt to a new tax rate.

Kishida said he can show strength in the areas of economics and foreign policy

sweating the small stuffs like adjusting cashier systems does not sound like much strength in economics.

he wants to be a leader who listens to the people.

yes, cut the taxes !

5 ( +6 / -1 )

You want to lead the country?

Put on a freaking mask!

Shakes head

-1 ( +5 / -6 )

"Hiking the tax rate would burden small and midsize companies with additional costs" such as adjusting their cashier systems to adapt to a new tax rate, he never said.

0 ( +0 / -0 )

He is a liar, I remember his lies about whale hunting as he was bribing African countries to vote for Japan.

6 ( +7 / -1 )

I second that Paul !the man is a born liar!

2 ( +3 / -1 )

With Japan spending 100 trillion yen and collecting only in the 60 - 70 trillion yen in tax revenues (30-40 trillion annual budget deficits) - and that's when times were relatively "good" - it's clear as daylight that the consumption tax rate should be hiked to 30%. Consumption will recover nicely by itself, once people are free from COVID-19 conditions, without a debt-producing consumption tax cut.

Or alternatively, the pundits could identify 30-40 trillion yen of spending out of that 100 trillion total which shall be eliminated, instead. (Or a combination of spending cuts to offset a consumption tax hike.)

Or alternatively, the debts can just be racked up big time in till such a time as it all goes SPLAT. Some people like this enjoy-things-while-they-last option, bless their souls.

Note, tax revenues are going to be totally decimated in 2020, not to mention the total spending splurge that has occurred due to COVID-19. So the horrid deficit numbers I note above, are actually somewhat rosy.

A wise government should not be spending the kitty plus borrowed money, year after year, given the propensity for Japan to suffer natural disasters, and more unusual ones such as this COVID-19 mess.

-1 ( +3 / -4 )

@fxgai, you are out of your mind to propose a 30% sales tax. No one would buy anything and the black market would flourish. Japan cannot escape the demographic cliff. The age of pension entitlement will rise and the amount will shrink. The government debt will rise so much and will simply be written off. At the end of the day the value of the yen will fall.

3 ( +4 / -1 )

It would be tax deductible and the cost is not significant when you consider the over all situation, but then this is the logic of a person in govt in Japan so what clue would they have about anything.

This is what's called myopic thinking. You only seek to remedy the current problem by cutting the consumption tax, but you fail to see the long term problems that this would entail. Reducing the consumption tax benefits the needy now, but kicks the problem of paying for rising health care costs and pension down the road. In a way, you prefer instant gratification instead of solving long-term entrenched problems. So perhaps you and your ilk are a more serious problem with logic than kishida.

-1 ( +2 / -3 )

I like his position as politician to be candidate prime minister but I think he is the weakest, he has his group that is weaker Ishiba group and cia. And tomorrow Suga will announce candidate, many LDP groups supporting him to be PM. Abe scandals protector Suga will save those groups involved. Unfairness will run with Abe policy hiding forever the scandals. The LDP party for Japanese people? Hmm...

1 ( +1 / -0 )

nakanoguy01Today 09:51 pm JST

It would be tax deductible and the cost is not significant when you consider the over all situation, but then this is the logic of a person in govt in Japan so what clue would they have about anything.

This is what's called myopic thinking. You only seek to remedy the current problem by cutting the consumption tax, but you fail to see the long term problems that this would entail. Reducing the consumption tax benefits the needy now, but kicks the problem of paying for rising health care costs and pension down the road. In a way, you prefer instant gratification instead of solving long-term entrenched problems. So perhaps you and your ilk are a more serious problem with logic than kishida.

Nakanoguy , you miss the whole point, the can is now so far down the road that the person supposedly kicking it cant even see it, its beyond even being able to see it with the the most pwerful telescope ever developed, so whats the difference, now or later? The thing is NOW later there may not even be a LATER.

But your ilk are so far into the imaginery thinking they cant even think in real terms as in now in real time as events unfold .

But lets imagine everyone is doing fine right now,...............and pick up the can , you couldn't even now, lift the weight of it even though that can is empty that is being kicked down the road.

Real time as opposed to imaginary futuristic , like most countires the debt , the borrowing is just added zeros no one in ther right mid believes or expects its ever going to be paid back !

Especailly Japan, they are printing yen they hold the bonds, they owe the post office which is Japan owned, its not like they owe it in US$s or to the chinese or some other silly thing. Print more money who cares.

As FXGAI says the consumption tax needs to be 30 - 40% to repay the debt Japan has written but then the country could not fucntion, so time you woke up and stopped living in your disney world Nakanoguy and lived in the now .

1 ( +1 / -0 )

What ever happened to the idea of a deputy PM you know like a stand in guy ?

0 ( +0 / -0 )

Kōno Kono Kono

-1 ( +0 / -1 )

That's not even true. For example, the GPIF doesn't "pay for" the pension system, as the fund consists almost entirely of securities, which are held for investment purposes and not for the purpose of making cash payments to pensioners.

Income from those investments is what will pay pensions. Maybe we need posts from readers who understand public finance.......

0 ( +1 / -1 )

As FXGAI says the consumption tax needs to be 30 - 40% to repay the debt Japan has written but then the country could not fucntion, so time you woke up and stopped living in your disney world Nakanoguy and lived in the now .

Based on OECD data the tax burden of the Japanese, defined as government revenues from all sources as a proportion of GDP is the third or fourth lowest of the three dozen most developed nations. On any given year it might trade places near the bottom with the US and occasionally with South Korea. Only Turkey and Mexico, those bastions of economic growth and innovation, have lower tax burdens. Japan's tax burden is about ten percent below the OECD average and 20% below the Scandanavian nations. There is scope to raise taxes in Japan to pay that debt down but everyone whines taxes are too high and cries for a tax cut.

0 ( +2 / -2 )

The most crucial aspect to take into account in regard to point of purchase taxation is the difference between VAT Europe and J Consumption Tax. And how this difference affects the amounts levied.

Value-added tax (VAT) is one where the consumption tax is charged at each stage of the production chain. Revenue is assumed, and thus defined as “value added,” and taxed accordingly.

J Consumption taxes levied on the purchase of goods/services. Essentially a flat rate applied to every transaction, a percentage of the total value.

OK, how much and how often?

Here’s the JNTA basics

https://www.nta.go.jp/english/taxes/consumption_tax/01.htm

Got that out of the way, Fumio Kishida again is ignoring the fact that J consumption tax is a regressive blunt instrument. The point is a refusal from all the candidates to restructure and reform Japan social security and tax system

1 ( +1 / -0 )

Why we need to pay tax on food is beyond me?

2 ( +2 / -0 )

@fxgai

With Japan spending 100 trillion yen and collecting only in the 60 - 70 trillion yen in tax revenues....

The 30 trillion to 40 trillion yen shortfall is converted into government bonds, most of which the BOJ buys, and thus the "debt" is owned by the authorities. The govt can have even that "debt" cancelled if it wants. The rest of the bonds go to institutions and individuals who receive returns that are close to zero.

it's clear as daylight that the consumption tax rate should be hiked to 30%. 

Clear to someone who believes public finances works the same way as household budgets, Hikes that large that would be suicidal, given that the last couple of small rises triggered recessions.

0 ( +1 / -1 )

The govt can have even that "debt" cancelled if it wants.

Dream on

-1 ( +0 / -1 )

fxgai, you are out of your mind to propose a 30% sales tax

I proposed 2 options, including cutting spending actually - if you read carefully.

A consumption tax rate at around 30% is what would be needed to fund government spending.

If u don’t like it, great - let’s find 30-40 trillion yen of spending to cut instead.

-2 ( +0 / -2 )

As FXGAI says the consumption tax needs to be 30 - 40% to repay the debt Japan has written 

actually, that would only stop the debt from increasing. It wouldn’t be enough to pay it back....

-1 ( +0 / -1 )

@fxgai

Dream on

Care to explain why the govt can't cancel the debt once its fiscal agency, the central bank, takes ownership of it? Or are you once again criticizing a truth you don't understand?

0 ( +1 / -1 )

When was the last time they cancelled it, and why do you think that was the case?

-1 ( +0 / -1 )

 "....and why do you think that was the case?"

Central banks like to have a lot of bonds because they can use them as a tool of monetary policy. So they could cancel the debt if they wanted to but don't want to because that would make policymaking more difficult. The buying and selling of the debt instruments by the authorities is done to adjust interest rates. They have other policy roles as well, mostly concerning the provision of liquidity to the financial markets.

Regardless of how the bonds are used, nearly half of Japan's "debt" is currently owned by the authorities. This not debt how you think it to be - as in private household debt --- and that means your beliefs and opinions on this matter are based on a fundamentally flawed premise.

-1 ( +0 / -1 )

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