politics

Lower house approves tax hike bill despite DPJ revolt

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By Malcolm Foster

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BS Noda..shame on you for breaking the most important election promise DPJ made. This "reform "is not about the future of Japan - it will just screw the young "future " generation more to pay for the unsustainable pension system for the old. You want to truly " reform" Japan than start with the administrative waste reforms as DPJ promised. But that would mean that governemnt fatcats would have to do with less...can,t have that , can we. So let`s just tax the average Taro instead,ne.

15 ( +17 / -3 )

The DPJ, Noda included, have broken EVERY promise they made to get into power. Begging for unity in a party that should no longer exist is just foolish. Ozawa and his 57 or so cronies will walk out, paving the way for a new election in which I'm QUITE certain Ozawa will run for.

6 ( +6 / -0 )

The voting is underway! We will know in about 20 minutes...

-2 ( +1 / -3 )

400 votes... 275 against, 59 for at the moment

-1 ( +2 / -3 )

59 for at the moment

Those 59 are gonna have a hard time getting re-elected.

-2 ( +1 / -3 )

Consumption tax increase:

2014 April increase to 8%

2015 October increase to10%

DJP mutiny members: 38

-1 ( +1 / -2 )

Those 59 are gonna have a hard time getting re-elected.

oops? that was supposed to be: 275 for, 59 against at the moment

-1 ( +1 / -2 )

Those 59 are the ones still keeping to the DPJ,s manifesto promise which Noda is breaking - they are the only ones who should be getting re-elected REMzzz.

1 ( +2 / -1 )

Oops.. yeah.. good luck to them :)

0 ( +0 / -0 )

Noda and his mob have won in a dead-set canter - by the length of the straight. Grumble Guts Ozawa - loser again!

-1 ( +1 / -2 )

and the voting continues...

-3 ( +0 / -3 )

55 DPJ traitors exposed!

-4 ( +0 / -4 )

Coming up: Ozawa to announce his new party's name...

-3 ( +0 / -3 )

I predict the new party name to be something original like: New Democratic Party of Japan. That or some off the wall, "Happiness Bonding Party".

4 ( +4 / -0 )

Or how about "Kizuna Happiness Realization Party"?

4 ( +4 / -0 )

If 54 or more lawmakers join Ozawa, Noda’s party would lose its majority in the lower house of Parliament altogether and could be forced to call general elections.

There are 55 who voted against and a few more absentees (likely to be on Ozawa's side) so it seems that this is gonna be for real...

-1 ( +1 / -2 )

Not all of those who voted against will be leaving DPJ however..it will be tight though.

1 ( +1 / -0 )

Raise taxes and then get your buddies to build a new highway from Wakkanai to Kushiro. Problem is, this BS spending will never stop so without raising taxes public debt will just grow and grow. Why do we even need politicians to make such a decision? Seems like anyone can just change the 5 to a10% and get more money for the government (to build more roads of course). Food and children's clothing should be exempt.

2 ( +2 / -0 )

Let's see if Ozawa will actually live up to his own promise this time and quit. It would be the third time he's threatened to and didn't, if he doesn't.

3 ( +3 / -0 )

This place needs a VAT system. How dare these fat rich people step on the common people. I am going to cut back on buying junk here. Screw them selfish idiots. And good luck with those struggling with kids clothes, diapers, food, meds etc. and I hope the rich fat cats of Noda's usotsuki promises choke on there cookies, doughnuts and potato chips.

8 ( +8 / -0 )

Onniyama, where did get it from that certain construction firm(s) were able to influence today's votes?

-3 ( +0 / -3 )

Clemens Simon. Sorry, I did not mean to imply that. I just mean that the increased revenue from the increased sales tax will be wasted on useless projects as usual.

2 ( +3 / -1 )

Well, that gives me some time to organize a smooth exit from the country.

I say that because I'm one of the fools who work in one of those industries that dosen't have any benefits, and won't raise salaries. I could privately save for my future but if the cost of living goes up, that will eat into the amount I can save, so screw that idea.

The good news is this pretty much makes a decision for me that I was unable to make in the last 12 months or so.

7 ( +7 / -0 )

JapanGalJun. 26, 2012 - 04:29PM JST

This place needs a VAT system. How dare these fat rich people step on the common people. I am going to cut back on buying junk here. Screw them selfish idiots. And good luck with those struggling with kids clothes, diapers, food, meds etc. and I hope the rich fat cats of Noda's usotsuki promises choke on there cookies, doughnuts and potato chips.

In a country like Japan, VAT is simply impossible to properly apply, and will end up creating a 20% or more tax, and 5% or less tax revenues. I would take 10% over VAT any day, and that says a lot. Also look at the VAT intensive countries, all have vastly increasing financial gaps between the average people and the rich, since VAT doesn't hurt the rich but does people below.

-2 ( +0 / -2 )

Congralations to PM noda for pushing this tax hike through.

This should have been done a decade ago.

0 ( +3 / -3 )

Sorry, I did not mean to imply that. I just mean that the increased revenue from the increased sales tax will be wasted on useless projects as usual.

Really? I thought all the debating that occurred before this day on these bills was because the opposition (and DPJ) were very adamant about how the extra revenue is going to be spend.

-3 ( +1 / -4 )

“In 10 years’ time, we may see a more disastrous fiscal situation,” Shirakawa warned.

I'm sure our future leaders in Beijing will have got a grip on the situation by then :)

2 ( +3 / -1 )

Good boy, PM Noddy!

He's nodding "yes" so hard to his bosses in the IMF and Washington, there's a danger of his head falling off.

3 ( +3 / -0 )

OnniyamaJun. 26, 2012 - 04:14PM JST

Raise taxes and then get your buddies to build a new highway from Wakkanai to Kushiro. Problem is, this BS spending will never stop so without raising taxes public debt will just grow and grow. Why do we even need politicians to make such a decision? Seems like anyone can just change the 5 to a10% and get more money for the government (to build more roads of course). Food and children's clothing should be exempt.

You are saying that increased public spending using tax from average folks is good? I do hope your comments are sarcasm.

What Japan needs is reigning in useless spending like pensions, which mostly are taken out of the economy in the form of long term savings. Or at least force people to use 100% of their pension money or risk losing the amount they don't use. Japan has a deficit of 45 trillion yen and pension payments of 47.3 trillion yen, so if you make payments equal to what they were in 1986 (Japan's deflation and shrinking GPD can be attributed to those that made payments into the system between forty years ago and now), you chop that pension budget down to 30 trillion yen, or 17 trillion in savings compared to just 13 trillion at best for tax (though tax is likely much less, since people will have lost 10% of their income overnight)

-2 ( +1 / -3 )

Clemens SimonJun. 26, 2012 - 03:25PM JST

55 DPJ traitors exposed!

And 300 Japanese traitors exposed. I doubt that these politicians actually did any of the risk analysis when it came to increasing taxes or decreasing pensions.

1 ( +2 / -1 )

I doubt that these politicians actually did any of the risk analysis when it came to increasing taxes or decreasing pensions.

I'm sure they did. Why would you doubt it?

-1 ( +1 / -2 )

Start giving tickets to all those inconsiderate, poor drivers that i see every minute breaking the traffic laws and raise money that way.

3 ( +4 / -1 )

Hmm, increased tax on food and clothes. Just what a struggling family needs right now. Why isn't food and clothes (i.e basic necessities) exempt?

4 ( +6 / -2 )

The poor tend to buy cheap food/clothes and get taxed 5% for it while the rich tend to buy expensive food/clothing and get taxed the same 5%.

The tax on a sirloin steak is much higher than that on a piece of chicken...

Not fair? Why not, tokyokawasaki?

-2 ( +2 / -4 )

What Japan needs is reigning in useless spending like pensions

You mean Japanese people (or anyone entitled to such provision) doesn`t need a pension?

3 ( +3 / -0 )

Tax hike will only marginally increase the tax revenue, but will greatly damage the economy... Meaning that overall government revenue may actually decrease. I doubt Mr. Noda took out a calculator and did the math. His proposal is mathematically flawed and economically fatal.

I am hoping to bail this place in next 2 years...

2 ( +3 / -1 )

Clemens SimonJun. 26, 2012 - 05:11PM JST

I'm sure they did. Why would you doubt it?

They seem to ignore everything from everyone and are too preoccupied with politely insulting each other rather than talking about issues in a constructive manner. When's the last time you saw a politician say why they voted for or against something other than "on principle"

1 ( +2 / -1 )

tokyokawasakiJun. 26, 2012 - 05:30PM JST

Hmm, increased tax on food and clothes. Just what a struggling family needs right now. Why isn't food and clothes (i.e basic necessities) exempt?

Considering many Japanese people can't afford anything else in the first place, it's a tax they can't escape. If it wasn't for those two, the 13 trillion revenue will probably fall down to just 3 trillion or so.

Taxes in Japan are already too high, especially for businesses. They need to reign in expenditures first or else they will never stop being in debt. You don't get a second loan to pay off the first, that's how you go bankrupt with two strikes instead of one.

1 ( +3 / -2 )

Bravo Noda! You've actually brought did something unlike numerous petty self severing politicians in parilment. Wasteful spending is a large problem and must be looked into but Japans to shore up it's finances, this tax hike was inevitable. It's nice to see a politican potentially forgoing his future for the better good of his nation. 5% more is not going to deter me consuming nor do I think will it to others.

-1 ( +1 / -2 )

When's the last time you saw a politician say why they voted for or against something other than "on principle"

Sunday morning tv. Pretty much every week. That is, when I'm able to get out of bed.

0 ( +2 / -2 )

Yep, too little too late. But even Noda’s government projects the step will take only a modest bite out of Japan’s deficit

0 ( +0 / -0 )

I'm split on this. Boo to the tax hike because honestly, there are so many cuts they could be making before this and this will screw the young people over even more. NO one is having kids? Hmmmm.. because they can't afford it, no daycare... no one to pay for the old folks who got Japan into this mess by over spending. Yeah and hahaha to Ozawa and losing. Quit and form yet another party in hopes of one day becoming PM.

I don't know why I am staying here. This place is crumbling and going from developed nation to developing. Tax hike, Toyota relocating factories, still no jump in the birth rate, radiation....

2 ( +5 / -3 )

"The tax on a sirloin steak is much higher than that on a piece of chicken...

Not fair? Why not, tokyokawasaki?"

The percent of income spent by poor people on food is about 35 percent. For the rich about 5 percent. Poor can't cut back too much, already eating at home and mostly cheap food. The rich can easily cut back on restaurants and steak. So a blanket 5 percent tax is regressive and hurts the poor twice or ten times as much as the rich. Basic economics.

5 ( +5 / -0 )

basroil: "They seem to ignore everything from everyone and are too preoccupied with politely insulting each other rather than talking about issues in a constructive manner. When's the last time you saw a politician say why they voted for or against something other than "on principle""

I actually agree with you on this one, and Tanigaki is a prime example (as is Ozawa). This kind of thing is of course not limited to Japan, but it's a whole lot more transparent how useless they are here.

Anyway, I think I just saw in a headline somewhere else that Ozawa is thinking of not leaving the party. No surprise there. For a guy who drones on and on about the DPJ breaking his own ridiculous promises, the guy sure can't live up to them himself.

2 ( +2 / -0 )

The percent of income spent by poor people on food is about 35 percent. For the rich about 5 percent.

You mean to say that a (poor) person with a yearly income of 1,200,000yen spends 420,000yen of that on food? That's 35,000yen a month.

You mean to say that a (rich) person with a yearly income of 10,000,000yen spends 500,000yen of that on food? That's 42,000yen a month.

What kind of basic economics is that?

Rich people spend that kind of money on one meal, not a whole month's worth!

-1 ( +3 / -4 )

I would understand raising the consumption tax if the government were to couple it with honest, substantial, and verifiable reforms in the current system of wasting money. There has been virtually no mention of fiscal reform, but for the LDP's demand that lower income pensioners not receive a guaranteed minimum that would enable them not to be homeless. Anything that might improve people's lives gets axed. What happened to Renho and her budget slashing committee? Was that only for show? I guess it was, because now the DPJ and its campaign promises have simply morphed into the new LDP.

How much should we give? They only answer more, more, more.

4 ( +6 / -2 )

That's 2 really terrible bills passed in 1 week. The other being the anti-download bill. A sad sad day for Japan...

4 ( +4 / -0 )

No surprise that an employee of Credit Suisse would call for a more neoliberal approach, but sadly he has a point. This tax hike, whatever the rights and wrongs, will barely dent the massive debt Japan is in. As we all know, Noda may not survive the year and more instability, procrastination and factionalism will make sure that no coherent plan will be implemented. I shudder to think what state things will be in in 10 years.

3 ( +4 / -1 )

It's a shame that so many people haven't stopped to consider that this tax is counter-productive in the long run.

The people with money are going to hardly notice any differences. However the people living from pay check to pay check are going to have to cut their living expenses even more to pay more for goods and services.

I personally would have supported this tax hike IF and ONLY IF the DJP would have left life essential items out of the tax hike. Rice, (which btw is already HEAVILY subsidized by tax money) bread, milk, cheese, etc etc etc, essential food products, LP gas, utilities for the average consumer, etc etc etc. All these things are going to see a rise in prices due to this rate increase.

Noda, nice try but you should have thought it through more and considered the small people too!

4 ( +4 / -0 )

Clemens SimonJun. 26, 2012 - 07:21PM JST

You mean to say that a (poor) person with a yearly income of 1,200,000yen spends 420,000yen of that on food? That's 35,000yen a month.

You mean to say that a (rich) person with a yearly income of 10,000,000yen spends 500,000yen of that on food? That's 42,000yen a month.

What kind of basic economics is that?

It's actually pretty accurate except your definition of rich. Lets take rich to be five times your amount, and well-off to be between 8 million and 12 million yen, which is how it would be defined in practically any other country that has actual income taxes.

35000 yen/month is about 1100 yen a day, which sounds about right for someone skimping on food (like myself, though I tend to spend a bit more due to the fact I'm in a large city). Even cooking your own meal is about 400-600 a meal, and throw in a day or two eating out a month easily adds up to that. Likewise, %5 of 50 million is 2.5 million, or about eight times what a smart rich person would spend on a meal.

Now lets look at the economics with an extra 5% tax, i.e. 95% of your money actually going to purchases vs only 91%. The 35000 yen that now buys you 33333 yen worth of food will be worth only 31818yen. The stores aren't going to eat that difference, so instead you will be spending 5% more. That 420000 yen a year will now be 44100 yen a year, or 36.75% of your yearly earnings. Suddenly you just lost 2% of your wages. Since a person who is close to poverty ends up spending everything they have, or at least close to it, it's even worse. Lets assume that you originally spent 90% between housing, food, transportation, and other necessities. After the increase, you now spend 94.5% of your money on necessities, and have just 66000 yen a year left over when you used to have over 100000. For a better off person who only spends 35-40% of their earnings on necessities, you have an increase to just 42%, which means that even though the better off people pay more taxes, it affects those who are not well off much more.

Nobody with 10 million yen earnings spends 42000 yen a meal, not for a single person, and not on a common day. Perhaps treating an extended family for celebration of something important, but if they spend it on a whim, they wouldn't be well off for long.

1 ( +3 / -2 )

Tax hike will only marginally increase the tax revenue, but will greatly damage the economy... Meaning that overall government revenue may actually decrease. I doubt Mr. Noda took out a calculator and did the math. His proposal is mathematically flawed and economically fatal.

Sure. We need a crook like Ozawa to sort things out. I forgot, what was his plan exactly?

0 ( +2 / -2 )

It's actually pretty accurate except your definition of rich.

Believe me when you earn 10 times that what the "poor" make, you will be considered "rich" by those people.

Also, when the tax office starts to put you in a higher tax bracket, they do so because they consider you "rich".

35000 yen/month is about 1100 yen a day, which sounds about right for someone skimping on food (like myself, though I tend to spend a bit more due to the fact I'm in a large city). Even cooking your own meal is about 400-600 a meal, and throw in a day or two eating out a month easily adds up to that. Likewise, %5 of 50 million is 2.5 million, or about eight times what a smart rich person would spend on a meal.

Now lets look at the economics with an extra 5% tax, i.e. 95% of your money actually going to purchases vs only 91%. The 35000 yen that now buys you 33333 yen worth of food will be worth only 31818yen. The stores aren't going to eat that difference, so instead you will be spending 5% more. That 420000 yen a year will now be 44100 yen a year, or 36.75% of your yearly earnings. Suddenly you just lost 2% of your wages. Since a person who is close to poverty ends up spending everything they have, or at least close to it, it's even worse. Lets assume that you originally spent 90% between housing, food, transportation, and other necessities. After the increase, you now spend 94.5% of your money on necessities, and have just 66000 yen a year left over when you used to have over 100000. For a better off person who only spends 35-40% of their earnings on necessities, you have an increase to just 42%, which means that even though the better off people pay more taxes, it affects those who are not well off much more.

basic economics, eh? LOL Sorry, but I skipped over that wall of text...

1 ( +2 / -1 )

Too little too late I think.

0 ( +1 / -1 )

Ozawa's: "I and all of Japan's citizens are against the reform bills"

LOL Doesn't seem that way!

0 ( +2 / -2 )

Now, if you want to talk about wasteful spending -- TRULY wasteful spending -- then start by looking at the many public works projects Japan engages in that are often abandoned or at least underused once built. Heck, one of the DPJ promises in its manifesto was to do away with wasteful spending, with even certain dam projects named, but Noda went against his own parties promise and okayed the dam project after it had been stopped. They should cut the number of lawmakers for starters, then go through all the city officials with a fine tooth comb and get rid of all the amakudari and other unnecessary employees. If people are still working, they should not be allowed to receive pension -- I find it ridiculous that people can get a full pension and then still a full paycheque.

4 ( +5 / -1 )

You mean to say that a (poor) person with a yearly income of 1,200,000yen spends 420,000yen of that on food? That's 35,000yen a month.

Sounds about right. Hard to get by on less than 1000 Yen a day for food - believe me.

Rich people spend that kind of money on one meal, not a whole month's worth!

They could but probably dont - they didnt get rich with dining habits like that.

0 ( +0 / -0 )

The tax increase is necessary and overdue. 5% is very low compared to other countries that have a consumption tax.

0 ( +2 / -2 )

Big mistake...The Canadian government introduced a sales tax at the height of a recession, using the same argument, and the deficit reached epic heights. High taxation has never reduced debt loads, and it won't do anything to spur investment, or create jobs.

Japan needs CUTS in taxation, NOT increases. A higher consumption tax won't work if people's incomes aren't rising, are mired in part-time/contract work, or aren't gainfully employed.

Economic growth, entrepreneurship, investment, and free trade are what Japan needs more of. PM Noda's vision is archaic, and economically unsound.

1 ( +3 / -2 )

Japan is still struggling to recover from damages by 3/11 disaster. The tax increase could sap still-fragile consumer spending and business confidence. This could send Japan into a deflationary depression, and furture shrink the GDP from falling prices and wages lead to rising unemployment.

Noda's rush to force through significant tax increases is questionable. It's a bad timing to raise the consumption tax at a time when Japan is worrying about a global depression. Japan has other options and they should issue new government bonds. Japan has the largest savings surplus in the world, and that this surplus enables the nation to finance most of the debt domestically and stably at very low interest rates. In addition, the Japan has the largest current account surplus, that it is the largest creditor country, and that it has the world's largest foreign exchange reserves.

1 ( +1 / -0 )

serendipitousJun. 27, 2012 - 12:13AM JST

The tax increase is necessary and overdue. 5% is very low compared to other countries that have a consumption tax.

And the corporate tax rate is two or three times everywhere else. That drives salaries down on average, and thus 5% is all that people can afford right now. Perhaps if they stopped wasting money and gave companies incentives to stay and provide better jobs.

-1 ( +1 / -2 )

And the corporate tax rate is two or three times everywhere else. That drives salaries down on average, and thus 5% is all that people can afford right now

Oh come on! 5%? Nothing. Poor people in the UK pay 20% consumption tax.

0 ( +0 / -0 )

sfjp330

Japan has other options and they should issue new government bonds.

To pay off their MASSIVE DEBT? Ah, yeah great idea. Borrow money to pay off lenders. And where will that get Japan?

0 ( +0 / -0 )

Japan has the highest public debt in the world, surpassing Greece, Portugal and Ireland. How do posters here suggest they pay it back?

-1 ( +0 / -1 )

Even at 10% the consumption tax will still be comparatively low to other countries. I do, however, have two concerns about the Noda plan: the uniformity of those planned tax hikes, and, two, the heavy-reliance on revenue increases alone to address Japan’s debt crisis.

When you consider how much the national and local government wastes on unnecessary public works—such as cementing the countryside over, spoiling Japan’s once beautiful coastline with “tetrapods” (gigantic concrete blocks resembling jacks), reclaiming land in a country with a falling population, and building gleaming new airports in places where nobody in their right mind would fly in or out of—it’s not difficult to see that there is quite a bit of room for cuts in spending. I say, for every one percent increase in the consumption tax, the government should try to find ways to reduce government spending by, say, 5 percent. They could start with cutting the number and pay of politicians, reducing budgets in the nation’s behemoth bureaucracy, eliminating redundancies, and so on. It’s high time for Japan’s public servants to start serving the public rather than the other way around.

Secondly, increases in the consumption tax should not be uniformly levied, as is the case today, but applied in a manner such that the tax is less regressive, less burdensome on those least able to afford it. For example, maintain or reduce the current 5% consumption tax on basic foodstuff, but raise it to 20% on, say, junk food and fast food. (Devil in the details, I know.) Keep it at 5% on domestically produced clothing, but 25% on clothing manufactured in China or Vietnam. Maintain the 5% consumption tax on hybrid and electric cars, but raise it to 15% on other vehicles, 25% or more on gas-guzzling SUVs and luxury cars. By manipulating the tax rates in this manner you can steer people towards habits that have long-term positive benefits on the environment, health, and society.

On second thought, nix that idea. It’ll only encourage corporations to grease politicians’ palms in order to get their products exempted from the higher consumption tax. By all means, though, let’s eliminate wasteful spending.

0 ( +1 / -1 )

When I wrote above of Japan’s need to reduce wasteful spending, I was thinking first and foremost about the need to reduce both the number of lawmakers in the national and local assemblies and to cut the generous emolument paid to politicians.

The Japanese Diet has 722 members, 480 in the House of Representatives—the Lower House in which real power lies—and 242 in the House of Councillors, or Upper House. In a country that has only 40% of America’s population, there is no reason it should have 35% more representatives in its national assembly. You could cut the number of politicians by about half to say 350—250 in the lower house and 100 in the upper house—and there would still be more than enough representation.

As for the salaries of Japan’s politicians, I first became concerned when my wife, who was working in the local mayor’s office, told me that the city assembly members earn some ¥800,000 per month whether they are in session or not. Whenever the assembly does meet, they are given an additional per diem just for showing up. Biannual bonuses and first-class “fact-finding” trips abroad at public expense are a matter of course, and when they complete their term they receive another bonus. Not a bad deal—almost makes me want to change my citizenship and become a politician. But, when this city (Fukuoka) continues to struggle with debt brought on by misguided projects, for which these feckless leaders voted, I can't help feeling that something is wrong.

An interesting article last year in the Japanese Times, which goes into some detail about the finances of the Tokyo metropolitan government, shows that Fukuoka is not alone in overspending and overcompensating its "leaders".

The article says, “At ¥11.8 trillion, the metro government’s budget for fiscal 2011 is equal to Saudi Arabia’s, and was barely eclipsed by South Korea’s ¥14 trillion and Norway’s ¥12.7 trillion budget in fiscal 2010.”

I don’t know about you, but I was flabbergasted when I read that. Granted, the yen has been riding high lately which has a way inflating the price of everything, but Korea, a country that is technically at war and has the world’s sixth largest standing army at 653,000 troops, and a population 3.7 times larger than the city of Tokyo, spends only 19% more to run an entire country than Ishihara spends to run the Tokyo metropolitan government . . . Something's very wrong with this picture.

What’s more: “According to the metro government, Gov. Shintarô Ishihara will receive ¥1,359,900 a month in fiscal 2010. His bonus, paid in June and December, totaled about ¥6.6 million, bringing his annual income to about ¥26 million. At the end of each four-year term, Ishihara also received retirement benefits. He received more than ¥47.2 million at the end of the first term in 2003, followed by over ¥45.2 million at the end of his second term in 2007. He is expected to receive ¥43.5 million after his third term expires in April.”

That’s a hell of a lot of money. In his first term in office alone Ishihara earned a total of about ¥151,200,000 (between $1.3 ~ 2 million, depending on the exchange rate). By comparison, Obama earns roughly the same amount of money—$400,000 per year (about ¥31 million)—as the so-called "leader of the free world".

Again, something is very, very wrong with this picture and the sooner Japanese cotton on to this, the better. It's high time for a "Green Tea Party" to shake this country up and end politics as usual.

-1 ( +1 / -2 )

The only one making any sense is Hiromichi Shirakawa, Credit Suisse’s chief Japan economist. This tax increase will not only not put a dent in the deficit, but will choke consumer spending. As when the first consumption tax was introduced and subsequently raised, there will be a spike before it becomes effective, and a precipitous fall afterwards. The initial increase in revenue, if any, will be overshadowed by the resulting depression. Exodus of producers will also likely follow.

0 ( +1 / -1 )

Japan has the highest public debt in the world, surpassing Greece, Portugal and Ireland. How do posters here suggest they pay it back?

Step one, cut income taxes on working people, and businesses. This will allow people to keep more of what they earn, and participate more actively in the economy. Companies could use the extra money to expand their business, or start new ventures, and hire more people.

Working people would be better able to buy good and services, or perhaps start businesses of their own (entrepreneurship is very low in Japan), and create more jobs.

Increased economic, and entrepreneurial activity will then make a consumption tax work better as more revenue will be collected from a more vigourous economy.

Hiking up the consumption tax won't generate more revenue as it will needlessly increase costs on things like food, medicine, transport, books, etc. It will discourage investment, and force companies and individuals to invest outside Japan.

As the tax goes up, people will hold off on investments, and purchases because of the increased cost caused by taxation. The Japanese people are over-taxed as it is. Another tax increase is the last thing Japan needs right now.

If an increase in the consumption tax were mitigated by a deep cut in income taxes, that would make more sense and help grow the economy which will allow for faster debt reduction.

-1 ( +0 / -1 )

Step one, cut income taxes on working people, and businesses.

Hmm, lower the money the govt. gets from tax. Nope, that won't pay anything back.

Hiking up the consumption tax won't generate more revenue...

Actually it will generate more revenue.

...as it will needlessly increase costs on things like food, medicine, transport, books, etc.

Yes. All things in fact. But it's not needless.

-1 ( +0 / -1 )

Hmm, lower the money the govt. gets from tax. Nope, that won't pay anything back.

Yes, it would, if there is more economic activity than there's more money in the economy that would be subjected to the consumption tax.

More jobs, means more people participating in the economy through investment, or purchases increasing the flow of money into the economy. Thereby making a consumption tax more effective and less damaging.

Yes. All things in fact. But it's not needless.

There is no need to increase the cost of living on families, particularly the working poor (which Japan does have as well). The charities that operate here certainly don't need their costs to go up. People who need medicine to treat illnesses, and maintain their health don't need their costs to go up.

Taxing an over-taxed population isn't necessary, nor economically sound. Cutting taxes, wasteful spending, and boosting incomes is far better way to get a country out of debt.

If you were faced with high debt personally, or in your business, you wou;dn't be looking for ways to reduce your income, or increase your living costs, would you?

Look at Europe...decades of high consumption and income taxes. Their debts certainly didn't go down. Canada, where I'm from, also saw its national debt double in less than 20 years as the government increased taxes on working people.

Solving the financial crisis requires governments to think outside the box. Resorting to tax increases is just repeat archaic fiscal policies that have failed to deliver what their proponents promised.

-1 ( +0 / -1 )

Hmm, lower the money the govt. gets from tax. Nope, that won't pay anything back.

Yes, it would, if there is more economic activity than there's more money in the economy that would be subjected to the consumption tax.

More jobs, means more people participating in the economy through investment, or purchases increasing the flow of money into the economy. Thereby making a consumption tax more effective and less damaging.

Yes. All things in fact. But it's not needless.

There is no need to increase the cost of living on families, particularly the working poor (which Japan does have as well). The charities that operate here certainly don't need their costs to go up. People who need medicine to treat illnesses, and maintain their health don't need their costs to go up.

Taxing an over-taxed population isn't necessary, nor economically sound. Cutting taxes, wasteful spending, and boosting incomes is far better way to get a country out of debt.

If you were faced with high debt personally, or in your business, you wou;dn't be looking for ways to reduce your income, or increase your living costs, would you?

Look at Europe...decades of high consumption and income taxes. Their debts certainly didn't go down. Canada, where I'm from, also saw its national debt double in less than 20 years as the government increased taxes on working people.

Solving the financial crisis requires governments to think outside the box. Resorting to tax increases is just repeat archaic fiscal policies that have failed to deliver what their proponents promised.

0 ( +0 / -0 )

If you were faced with high debt personally, or in your business, you wou;dn't be looking for ways to reduce your income, or increase your living costs, would you?

No but that is exactly what you are proposing. Income for Japan = tax. You propose to lower tax.

Yes, it would, if there is more economic activity than there's more money in the economy that would be subjected to the consumption tax.

I know what you are trying to say, but in Japan there wouldn't be increased economic activity. Just more savings. So the govt. collects less money and debt goes up.

0 ( +0 / -0 )

Cutting taxes, wasteful spending, and boosting incomes is far better way to get a country out of debt.

No disagreement about cutting wasteful spending. How do you propose to boost incomes. And cutting taxes will not get you out of debt.

1 ( +1 / -0 )

@ 2020hindsights.

Income for Japan = tax. You propose to lower tax

By Japan, I mean, Japanese people. Lower income taxes for Japanese people = more disposible income for Japanese people. The government of Japan isn't Japan. It is the institution elected to run Japan's services, and protect and serve its interests (which it often fails to do).

The government can't mandate higher wages, but it can boost income by lowering taxes on it. This would allow families, individuals, and businesses to keep more of the money they (not the government) work hard to earn.

This in turn better enables active participation in the economy. Consumers do not have to hold off on major purchases, or on investment opportunities (should they choose to do so).

Also, a tax cut for businesses (particularly small ones, and start-ups) would serve improve profit margins, and leave more money available to build their business or expand it. They'd also benefit by having a consumer base with more income to buy good and services.

Increased economic activity also spurs job creation (something the government can't do well). Higher employment also leads to increased economic growth, and prosperity.

A hike in the consumption taxes will only be effective if there is an active consumer base spending money on goods and services. If Mr Noda's plan is going to work, there have to be significant cuts in income taxes for working people and business.

in Japan there wouldn't be increased economic activity. Just more savings. So the govt. collects less money and debt goes up.

I won't dispute the frugality of Japanese people, but I don't see how their instinct to save money justifies taxing away more of their hard-earned money. Keep in mind that these saving are often for retirement, children's education, health care, housing, and care for the aged.

Plus, if the consumption tax is doubled, but net income is the same, then what do you think people will do? They will save even more money.

The Japanese government, at all levels, is just as corrupt and inept as most when it comes to spending taxpayer money. Giving an untrustworthy, largely incompetent institution more of our hard earned money is not a course to debt reduction or economic growth.

We agree on wasteful spending, And, that's something that should be addressed first and foremost. City offices have a long, scandalous history of squandering the billions of yen they collect each year. Before increasing living costs, governments at all levels should open themselves to a thorough, and public audit to root out waste, graft, and mismanagement.

Tax cuts are a means to an end. The ultimate goal is economic growth which makes paying down debt easier, and faster. An economy the is strong, and growing will generate more revenue than one that is choked by taxation. Japan can't tax its way out of debt.

Lower taxes on income = money in the economy = more good and services being purchased = more revenue for the consumption tax (even at its current, reasonable 5%) = economic growth.

@ 2020hindsights.

Income for Japan = tax. You propose to lower tax

By Japan, I mean, Japanese people. Lower income taxes for Japanese people = more disposible income for Japanese people. The government of Japan isn't Japan. It is the institution elected to run Japan's services, and protect and serve its interests (which it often fails to do).

The government can't mandate higher wages, but it can boost income by lowering taxes on it. This would allow families, individuals, and businesses to keep more of the money they (not the government) work hard to earn.

This in turn better enables active participation in the economy. Consumers do not have to hold off on major purchases, or on investment opportunities (should they choose to do so).

Also, a tax cut for businesses (particularly small ones, and start-ups) would serve improve profit margins, and leave more money available to build their business or expand it. They'd also benefit by having a consumer base with more income to buy good and services.

Increased economic activity also spurs job creation (something the government can't do well). Higher employment also leads to increased economic growth, and prosperity.

A hike in the consumption taxes will only be effective if there is an active consumer base spending money on goods and services. If Mr Noda's plan is going to work, there have to be significant cuts in income taxes for working people and business.

in Japan there wouldn't be increased economic activity. Just more savings. So the govt. collects less money and debt goes up.

I won't dispute the frugality of Japanese people, but I don't see how their instinct to save money justifies taxing away more of their hard-earned money. Keep in mind that these saving are often for retirement, children's education, health care, housing, and care for the aged.

Plus, if the consumption tax is doubled, but net income is the same, then what do you think people will do? They will save even more money.

The Japanese government, at all levels, is just as corrupt and inept as most when it comes to spending taxpayer money. Giving an untrustworthy, largely incompetent institution more of our hard earned money is not a course to debt reduction or economic growth.

We agree on wasteful spending, And, that's something that should be addressed first and foremost. City offices have a long, scandalous history of squandering the billions of yen they collect each year. Before increasing living costs, governments at all levels should open themselves to a thorough, and public audit to root out waste, graft, and mismanagement.

Tax cuts are a means to an end. The ultimate goal is economic growth which makes paying down debt easier, and faster. An economy the is strong, and growing will generate more revenue than one that is choked by taxation. Japan can't tax its way out of debt.

Lower taxes on income = money in the economy = more good and services being purchased = more revenue for the consumption tax (even at its current, reasonable 5%) = economic growth.

0 ( +0 / -0 )

2020hindsights Jun. 27, 2012 - 11:23AM JST Oh come on! 5%? Nothing. Poor people in the UK pay 20% consumption tax. 2020hindsights Jun. 27, 2012 - 11:25AM JST To pay off their MASSIVE DEBT? Ah, yeah great idea. Borrow money to pay off lenders. And where will that get Japan?

What a joke. Sounds like you want Japan to follow England's massive problem of overtaxation. Your idea is a road to disaster. Is this your solution?

1 ( +1 / -0 )

why haven't there been any details in the english language press about the social reform related bills accompanying the tax increase?

0 ( +0 / -0 )

why haven't there been any details in the english language press about the social reform related bills accompanying the tax increase?

What do you usually read?

0 ( +0 / -0 )

ubikwit:

why haven't there been any details in the english language press about the social reform related bills accompanying the tax increase?

There have.

Back in May this year the ministry's proposal called for, among other things,

strengthening support for younger people who seek jobs and are rearing children to help equalize social welfare benefits different generations get;

using tax money to subsidize low-income people who cannot afford pension and health insurance premiums;

setting a cap on the total out-of-pocket payments for medical- and nursing-care services;

placing a separate cap on financial burdens accrued for undergoing advanced medical treatments; and

enrolling more irregular workers in the pension and health insurance systems.

.

.

In the end (last week)....

The ruling DPJ was ready to compromise on its goals to :

consolidate kindergartens and nurseries into new day-care facilities,

to create a basic pension system that guarantees monthly minimum benefits of ¥70,000 and

to abolish a separate health insurance system for people aged 75 and older,

all of course if the LDP and New Komeito back its push to double the consumption tax by 2015.

0 ( +0 / -0 )

clemens

thanks for the input, but i read a letter to the editor to the japan times today that makes it seem like maybe there are more details in the fine print than have come to light, in particular, the letter appears to say that "the child-rearing allowance" is to be eliminated as part of the deal, though I doubt that is the case, as there was an earlier agreement already to draw back the terms of that. http://www.japantimes.co.jp/text/rc20120701a2.html#.T_BekrWELSg

0 ( +0 / -0 )

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