February 12, 2010
Yosano Kaoru, a longtime consumption tax increase advocate since he was the financial minister of the preceding Liberal Democratic-Komei government, is proposing that the consumption tax be earmarked for social services as state minister in charge of economic and fiscal policy now under the Democratic Party-led government.
This is a clever ploy, pretending that the only fund available for social services is the consumption tax. In the name of an “integrated reform in taxes and social services,” the Kan government intends to proceed with this scheme.
During last year’s Upper House election campaign, Prime Minister Kan Naoto was saying, “The government needs 17 trillion yen to fund pensions, medical services, and nursing care for the elderly. We are using all of the consumption tax revenues for these programs, but we still lack 10 trillion yen.” Bringing up a fiscal crisis, he was trying to persuade the general public to accept an increase in the consumption tax rate to make up for the shortfall.
Endorsing Kan’s arguments in the Lower House Budget Committee meeting on February 8, Yosano said that a child allowance program in the future should also be funded by the consumption tax.
The plan for making the consumption tax a special-purpose tax for social services was drawn up by Yosano in the first place in 2005 under the LDP-Komei government. Its aim was to make it easier to get public support for a consumption tax rate increase, and also to present to the public a clear-cut choice of “pay more” or “receive less,” which means people can receive appropriate benefits only if they shoulder heavier burdens.
As a result, the general public will always be under the threat of “Accept higher consumption tax rate if you want to keep the present level of social services.”
Government has the responsibility to guarantee decent living conditions, and the national finance obligations should secure funds for social services first.
The regressive consumption tax, which weighs heavier on people in lower income brackets, is the worst source of funds for social services. This principle should be strictly maintained all the more now when poverty and social gaps are widespread.
This is a clever ploy, pretending that the only fund available for social services is the consumption tax. In the name of an “integrated reform in taxes and social services,” the Kan government intends to proceed with this scheme.
During last year’s Upper House election campaign, Prime Minister Kan Naoto was saying, “The government needs 17 trillion yen to fund pensions, medical services, and nursing care for the elderly. We are using all of the consumption tax revenues for these programs, but we still lack 10 trillion yen.” Bringing up a fiscal crisis, he was trying to persuade the general public to accept an increase in the consumption tax rate to make up for the shortfall.
Endorsing Kan’s arguments in the Lower House Budget Committee meeting on February 8, Yosano said that a child allowance program in the future should also be funded by the consumption tax.
The plan for making the consumption tax a special-purpose tax for social services was drawn up by Yosano in the first place in 2005 under the LDP-Komei government. Its aim was to make it easier to get public support for a consumption tax rate increase, and also to present to the public a clear-cut choice of “pay more” or “receive less,” which means people can receive appropriate benefits only if they shoulder heavier burdens.
As a result, the general public will always be under the threat of “Accept higher consumption tax rate if you want to keep the present level of social services.”
Government has the responsibility to guarantee decent living conditions, and the national finance obligations should secure funds for social services first.
The regressive consumption tax, which weighs heavier on people in lower income brackets, is the worst source of funds for social services. This principle should be strictly maintained all the more now when poverty and social gaps are widespread.
