Ichida calls for establishing Ability-to-Pay tax system

Japan Press Weekly

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Ichida calls for establishing Ability-to-Pay tax system

Japanese Communist Party Secretariat Head Ichida Tadayoshi on June 15 used his question time at the House of Councilors Plenary session to criticize Prime Minister Kan's overall policy stance. Regarding tax and finance issues, Ichida called for the establishment of a progressive tax system based on the ability to pay, military budget cuts, and the end of tax breaks for large corporations. The following are excerpts from his interpellation:

You, Prime Minister Kan, said, ‘‘a thorough reform of the taxation system must be commenced" in order to improve the critical situation of Japan's public finances. If you emphasize the need for efforts to resolve the public finance crisis, as a first step, you should slash the military expenditure amounting to almost five trillion yen. The "sympathy budget" to the U.S. forces in Japan of 337 billion yen and the budget allocation for the relocation of U.S. Marine Corps units from Okinawa to Guam also need to be abolished.

Concerning tax revenues, wealthy people who, through their ownership of a large amount of stocks, gain sizable dividends are now eligible for a tax exemption which allows them to pay only half the amount of taxes that they are actually obliged to pay by law. If you scrap this exemption, you will gain the same amount of revenue that the previous DPJ government produced through its "budget screening" process.

"Corporate taxes in Japan are too high," large corporations have always insisted. However, they in fact have been given generous tax breaks in various areas. They even keep over 60 trillion yen as internal reserve funds. If the government truly intends to implement a "reform of the system of taxation," it must abolish various tax exemptions for large corporations.

The Japan Business Federation (Nippon Keidanren) calls for even lower corporate taxes. In addition, Naoshima Masayuki, Minister of Economy, Trade and Industry advocated the reduction of the corporate tax rate by 15 percent and promised a five percent reduction starting in the next fiscal year.

The idea that tax breaks for large corporations will contribute to Japan's economic recovery and to an increase in tax revenues is a blatant lie and will no longer be accepted by the general public. In fact, while the tax reduction has made large corporations immensely wealthier, increasing their internal reserves by 87 trillion yen, it has lowered the people's living standards and Japan's economic growth rate to the lowest level among advanced capitalist countries.

In regard to the consumption tax, I must emphasize its brutally regressive nature since low income people including people called the "working poor" with annual incomes of less than two million yen, families receiving livelihood allowances, and pensioners are forced to pay the same amount as the wealthy for basic necessities.

Responding to a bill submitted by the LDP to restore fiscal health, you (Prime Minister Kan) proposed forming a "Conference to Consider Restoring Fiscal Health," consisting of "nonpartisan Diet members who understand the critical importance of building healthy public finances." Many people are concerned about the unhealthy possibility of the formation of "a grand coalition government to raise the consumption tax rate."

The principle of the tax system must be based on people's ability to pay. The JCP therefore will adamantly oppose any consumption tax increase, as it will impose further hardships on people's livelihoods, accelerate the nation's economic crisis, and thus be highly inconsistent with efforts to create a decent quality of life for the majority.

-Akahata June 16, 2006