 Government tax panel calls for massive tax increase The government Tax Commission submitted to Prime Minister Koizumi Jun'ichiro on November 25 a report calling for the fixed-rate tax cuts be abolished by FY 2006. The panel also called for an increase in the consumption tax rate to 10 percent from the present five percent by FY 2007. At present, the fixed-rate tax cuts are 20 percent (up to 250,000 yen) of the amount of income tax and 15 percent (up to maximum of 40,000 yen) of the amount of residential tax. An increase in both the income tax and residential tax will force people to pay an extra 3.3-trillion yen each year, and another 12-trillion yen with a 10-percent consumption tax rate. Japanese Communist Party Policy Commission Chair Koike Akira on the same day criticized the tax panel's proposal as follows: "The government Tax Commission suggests that the fixed-rate tax cuts be abolished on the grounds that the nation's economy is improving. But such improvement is being felt only by large corporations. The proposed tax increase will inevitably cause a downturn in personal consumption. "The burden of the consumption tax is heavier for lower-income earners. If such a tax becomes Japan's main tax scheme, the country's increasingly regressive tax system will be decisively distorted. "The government tax panel cites the need to end the fiscal crisis as the pretext for a massive tax increase. Such an increase, however, will only slow down the nation's economy and finance. The need now is for the government to review wasteful spending on public works projects and the military as well as to review excessive tax breaks for large companies and high-income earners." (end) |