Gov’t must stop using social welfare as excuse to increase consumption tax rate

Japan Press Weekly

Japan Press Service Co., Ltd. is the only news agency providing information of progressive, democratic movements in Japan

Gov’t must stop using social welfare as excuse to increase consumption tax rate - Akahata editorial (excerpts)

The Democratic Party of Japan in an interim report on the taxation system and social welfare said that as financial resources to fund social welfare programs, the consumption tax “is very important.” It also demanded that “the government should immediately undertake a drastic taxation system reform, including a consumption tax hike.”

In the July House of Councilors election, voters delivered a severe verdict on Prime Minister Kan Naoto’s intention to increase the consumption tax. Has the DPJ forgotten this fact?

Groundless excuses

When the consumption tax was introduced in 1989 and its rate was increased to five percent in 1997, the government repeatedly used the argument that the consumption tax is a very important funding source for welfare services. During the two decades since the introduction of the consumption tax, welfare services have been getting worse rather than better. People are not so naive as to believe the government claim that the consumption tax is for “social welfare programs.”

In 1994 then Prime Minister Hosokawa Morihiro named the consumption tax a “national welfare tax” with the intention to gain public approval for raising the tax rate to seven percent by presenting this tax hike as a move to improve welfare programs. In actuality Hosokawa was not concerned about improvements in social welfare. He wanted to please the U.S. government with economic stimulus measures to be funded with the consumption tax revenue. This was revealed by the then secretary to the prime minister at a study meeting of the Japan National Press Club.

The Koizumi Jun’ichiro Cabinet declared that it would not increase the consumption tax rate as an excuse to reduce the social welfare budget. Under the Koizumi “structural reform policy”, social welfare expenditures were decreased by 200 billion yen annually and welfare services deteriorated rapidly. It was pointed out that the Koizumi Cabinet thought that continuing the “structural reform policy” would make it easy for the government to obtain public consensus for a future consumption tax hike.

The Kan Cabinet and the DPJ must stop using the argument of needing to improve social welfare programs as a means to get public support to increase the consumption tax. They must stop claiming ad nauseam that a consumption tax hike is inevitable in order to secure the resources needed to provide welfare services under severe financial conditions.

- Akahata, December 10, 2010