October 9, 2019

Japanese Communist Party Chair Shii Kazuo, in his interpellation at the House of Representatives plenary session on October 8, demanded that the consumption tax rate be immediately cut to 5% with the goal of the abolition of the tax itself. He also emphasized the need for a taxation system based on the principle of ability to pay.

It has been 31 years since the consumption tax was introduced ostensibly "to ensure a stable social security system" and "to rebuild national finances". The government, however, repeatedly cut back on state spending on social welfare services. Shii pointed out that the debts of the central and local governments have risen more than fourfold.

In contrast to the 397 trillion yen in revenue from the consumption tax, the revenue from three corporate taxes dropped by 298 trillion yen. Referring to the fact that the revenue from income and residential taxes went down by 275 trillion yen, Shii said, "The consumption tax has been siphoning money from the economically vulnerable while enriching the wealthy and large corporations."

Pointing to Japan's GDP figures over the past two decades, Shii said, "Japan has not been on a growth track. The repeated increase in the consumption tax rate is one major factor that has caused Japan to remain in economic doldrums for years."

Prime Minister Abe could not deny the figures Shii cited which showed that the increase in tax revenues from the consumption tax had been spent to make up for the losses resulting from tax breaks for the wealthy and large corporations. PM Abe admitted that "institutional factors" (i.e., tax cuts for the rich) and the "economic situation" in Japan have been the cause of declines in tax revenues.

Shii said that when the consumption tax rate rose to 8% from 5% in 2014, the government explained that there would be "only a temporary negative impact". However, in reality, consumption expenditures showed no sign of recovery even 5.5 years after the increase, leading to a decrease of 200,000 yen a year per household. Adding that annual wages also decreased by 150,000 yen per capita, Shii said, "In the middle of such a situation, the increase to 10% is extremely reckless."

PM Abe in response said, " I don't think the decision of the increase to 8%, in general, was a mistake."

Shii proposed that the government implement the following: properly tax the rich and large corporations; stop wasteful spending; and increase tax revenues by enhancing economic growth through assisting the household economy so that it can improve social security programs and education without depending on revenues from the consumption tax.

Past related article:
> JCP publishes appeal calling for cutting consumption tax rate to 5% without delay [October 1, 2019]