No reason to raise consumption tax rate: JCP Sasaki

   Japanese Communist Party representative Sasaki Kensho in a House of Representatives Budget Committee meeting on January 25 criticized the government and ruling block for pushing ahead with an increase in the consumption tax rate with no justifiable reason.

   Prime Minister Fukuda Yasuo in his policy speech made clear that the government will “promptly realize” an increase in the consumption tax rate in order to secure resources for the state share of the burden to finance the basic pension system which will be increased from the present one third to one half in FY 2009. Fukuda reiterated this policy in reply to Sasaki’s question.

   Sasaki pointed out that the government has pledged to allocate the tax revenue generated by the abolition of the fixed-rate income tax breaks for the earmarked resources. However, Welfare Minister Masuzoe Yoichi announced that out of the increased tax revenue of 2.8 trillion yen, only 0.68 trillion yen has been allocated for the earmarked resources.

   Sasaki criticized the prime minister for attempting to raise the consumption tax rate by using the same pretext despite the fact that the government allocated only one-fourth of the increased tax revenue. “You are attempting to deceive the public twice,” Sasaki stated.

   Finance Minister Nukaga Fukushiro justified the government policy by stating that the increased tax revenue has been used to build up resources for the basic pension system and to reconstruct overall state finances.

   Sasaki criticized the ruling parties for a breach in their election promise, stating, “The ruling parties have never said that the revenue generated by the abolition of the tax breaks will be used for debt repayment.”

   When it comes to the resources for social welfare programs, the government always talks about consumption tax hikes. Pointing out that the government never considers corporate tax hikes, Sasaki criticized the government for stubbornly avoiding measures that will increase the burden on large corporations.

   “By restoring the corporate tax rate of 37.5 percent as levied in 1990, trillions of yen in resources would be generated. There would be no need to raise residential, income, or consumption tax rates,” Sasaki pointed out.
- Akahata, January 26, 2008