Japan Press Weekly

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2011 September 14 - 20 [POLITICS]

Reconstruction tax hike won’t affect large corporations

Akahata editorial (excerpts)

To provide funds for post-disaster reconstruction, the income tax and corporate taxes are the likeliest to be raised. The Government Tax Commission is considering increasing the income tax for about ten years and corporate taxes for three years.

Complicated evasive tricks, however, lie behind a corporate tax levy. The levy will be about 10% in the corporate tax to be paid to the national government after cutting the corporate taxes paid to both the national and local governments by 5%. Simply put, the amount in corporate tax relief will turn out to be higher than that from a tax hike. Besides, the beneficiaries of such a tax relief are mainly large corporations.

In short, large corporations will not bear any extra burden for reconstruction. Only company employees and self-employed individuals will be asked to shoulder a greater burden of an increase in the income tax.

The Japan Business Federation (Nippon Keidanren) is absolutely opposed to any increase in the corporate tax rate in the first place. Keidanren Chair Yonekura Hiromasa on September 12 said, “From the standpoint of sharing the burden with the entire nation, it is possible for corporations to bear a burden to a certain extent,” but he added, “The period of burden sharing should be limited to three years.”

Large corporations have accumulated internal reserves to the amount of 257 trillion yen by adopting unstable employment practices, putting wages on hold, and lowering the unit price paid to subcontractors. Meanwhile, company employees’ salaries declined by 30 trillion yen.

It would defeat the purpose of reconstruction and revitalization if the introduction of a “tax levy” is only placed on the general public who are struggling with already lowered incomes, instead of placing more of a burden on large corporations with huge capital reserves.

Such a “tax levy” would further damage not only the livelihoods of people, including the disaster victims, but also the Japanese economy which should play a supporting role in post-disaster reconstruction.

Stop giving favorable tax breaks to large corporations and the rich, and make use of the excessively-amassed corporate internal reserves for reconstruction.