Japan Press Weekly

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2016 January 13 - 19 [POLITICS]

JCP Koike: Unreasonable plan to raise consumption tax rate should be cancelled

Japanese Communist Party Vice Chair Koike Akira on January 18 in a Diet meeting pointed out that the Abe government plans to impose heavier tax burdens and further welfare cuts on the general public while offering preferential tax treatments to large businesses, and demanded the cancellation of the planned consumption tax hike.

Koike in the Budget Committee meeting of the House of Councilors stated that although Prime Minister Abe Shinzo often claims that the additional tax revenue from the scheduled consumption tax increase will be used to fund social welfare services, this claim is inconsistent with what he has actually done. The JCP lawmaker cited the fact that the government slashed social welfare spending by 300-500 billion yen a year for three consecutive years.

Koike went on to note that the planned consumption tax hike will hit lower income families harder. He added that after the tax rate is increased from the current 8% to 10% in April 2017 as scheduled, the ratio of consumption tax payment to income for households with annual incomes of less than two million yen will go up from 5.8% to 6.7%, while the ratio for those with annual income of over 15 million yen will see a slight increase from 2.0% to 2.4%.

The JCP vice chair criticized the Abe government for levying more taxes on the general public and less on large corporations. Presenting data of ten companies that benefitted the most from the government’s preferential tax measures, including Toyota Motor and the Bank of Tokyo-Mitsubishi UFJ, Koike explained that they used their increased profits mainly to accumulate internal reserves instead of paying more to employees.

In reply, Finance Minister Aso Taro said that a larger part of corporate internal reserves should be used for wage increases and capital investments.

Koike said, “The plan to increase the consumption tax rate to 10% in April 2017 should be cancelled. The government should impose appropriate tax burdens on the wealthy and large corporations that have made a lot of money thanks to the “Abenomics” economic policy, otherwise Japan will not enter into a positive economic cycle.”