Japan Press Weekly

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2012 May 16 - 22 [FINANCE]

Keidanren seeks increase in consumption tax rate to 19%, decrease in corporate tax rate to 25%

The Japan Business Federation (Nippon Keidanren) on May 15 proposed that the government raise the consumption tax rate to 19% and cut the corporate tax rate to 25% from the current 38.01% by 2025 while annually slashing 200 billion yen in the budget growth in expenditure on social welfare services.

Keidanren’s policy proposal is encouraging so-called “belt-tightening measures” on the part of the general public and is running counter to the world trend seeking fiscal reconstruction through efforts to boost working people’s income.

The proposal calls for an increase in the rate of payment for medical bills that the elderly aged 70-74 pay from the present 10% to 20%.

Criticizing the government’s “Child Allowance” and tuition-free high school education program as “pork-barrel” waste, the proposal stresses the need to review the existing child-rearing programs, including the amount of state expenditure for children’s healthcare.

The proposal urges the government to stop pension payments to those in arrears with their payments on pension premiums. Keidanren also presses state authorities to try to exempt corporations from heavier contributions to social insurance payments.

However, the “belt-tightening measures” as recommended in the proposal have recently met with a strong backlash from the public faced with similar measures in France and Greece.

Such “belt-tightening measures” will further dampen domestic demand by sacrificing people’s living standards which will only result in a collapse of the country’s economy and finance.

The International Labor Organization (ILO) pointed out that “[T]he current path of consolidation will lead to weak employment growth and a worsening of the fiscal position in the medium-term.”

The ILO in its World of Work Report 2012 states, “For advanced economies, the focus should be on ensuring that unemployed persons, especially youth, receive adequate support to find new jobs.”