End policy of increasing public taxes and reducing taxes for large corporations: JCP Koike

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End policy of increasing public taxes and reducing taxes for large corporations: JCP Koike

The government Tax Commission on December 1 submitted to Prime Minister Abe Shinzo a set of proposals for FY 2007 tax reform. This report clearly shows that the government is sticking to its policy of imposing heavier taxes on the general public and implementing tax cuts benefiting large corporations that are already making record-high profits.

Concerning this panel report, Japanese Communist Party Policy Commission Chair Koike Akira on the same day issued a statement as follows:

The proposal for FY 2007 tax reform which the government Tax Commission adopted today put forward large-scale tax breaks for large corporations by reducing effective corporate tax rates in addition to the revision of the depreciation system to be implemented next fiscal year. While imposing on the general public heavier burdens with tax hikes as well as deep cuts in social welfare programs on the grounds of "financial crisis" and "shortage of resources for social security measures," the government intends to distribute the increased tax revenues to large corporations. This proposal is absolutely impermissible, because, if implemented, the general public will be forced to pay the bill for the corporate tax cuts by an increase in the consumption tax and other tax hikes.

It is said that the duration of the current economic expansion has become the longest among the economic booms after WWII, exceeding that of the Izanagi economic boom of 1965-1970. As a matter of fact, however, family incomes continue to decline and the general public has been increasingly suffering from economic hardships as is shown in the increase in poverty and the widening social gap that have become major social issues.

If the government really seeks economic revitalization as is called for in the commission report, the need now is to raise family income by tax cuts benefiting the general public. However, the commission proposed tax breaks that only benefit large corporations. In the past three years alone under the Koizumi Cabinet, the public was forced to shoulder an increase of 3.5 trillion yen in taxes, and the Abe Cabinet is still about to increase by 1.7 trillion yen the taxes for the general public in the next year by totally abolishing fixed-rate tax cuts in income and residential taxes. In addition, residential taxes and health insurance premiums for senior citizens will continue to increase. Leaving such a tax increase policy intact, the commission proposed another policy of further tax increases, including an increase in the per-capita rate in the residential tax.

On the other hand, the report calls for implementing further tax cuts to benefit large corporations and wealthy individuals.

A planned change in the calculation method of depreciation to be implemented in the next year will bring about tax cuts of at least 500 billion yen. Larger corporations that make larger amounts of investment in plants and equipments will receive more benefits from this measure.

The panel also called for a further cut in the effective rate of corporate taxes. A reduction in the effective corporate tax rate from 40 percent to 30 percent as is called for by the Japan Business Federation (Nippon Keidanren), will bring about, for example, tax cuts of 100 billion yen for Toyota and 40 billion yen for Canon. In total, this measure will reduce corporate taxes by nearly five trillion yen.

The government has been implementing an extraordinary measure to reduce tax rate on income from stock dividends and capital gains to 10 percent, benefiting the rich even more that of the U.S. Bush administration. Although this tax cut was introduced in 2003 as a temporary measure of five years, the commission proposed to maintain the preferential treatment to the rich by continuing part of this measure.

The government implements tax cuts during an economic recession on the grounds of the difficulties faced by corporations, and when corporate profit increases, the government also implements tax cuts on the grounds of the necessity to return the increase in the tax revenue. The government is taking a high-handed attitude by not giving the public any logical explanation of its policies of implementing tax cuts to serve large corporations. There is really no need to carry out tax cuts benefiting large corporations that have been making record high profits.

We must stop the upside-down government taxation policy of imposing heavier taxes on the public and implementing tax cuts for the benefit of large corporations. The JCP strongly demands that the government immediately stop increasing taxes on the general public by abolishing the fixed-rate tax cuts in income and residential taxes and imposing heavier tax burdens on the elderly, that the government stop further tax cuts benefiting large corporations and the wealthy and review their preferential treatments in taxes, and that the government stop all moves towards future increases in taxes on the general public such as an increase in the consumption tax rate. The JCP will strive to achieve these goals by joining forces with the public.
- Akahata, December 2, 2006