Japan Press Weekly

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2007 June 20 - 26 [FINANCE]

Abe Cabinet budget policy outline suggests consumption tax hike

The Abe Cabinet on June 19 adopted “Basic Policies for Economic and Fiscal Reform 2007,” in which it suggested it would carry out by the end of next March a “drastic reform” that includes an increase in the consumption tax rate.

The cabinet is intending to open “full-fledged discussions on tax reform” soon after the House of Councilors election in July, submit a bill to increase the consumption tax rate to the ordinary session of the Diet in 2008, and enact it by the end of next March.

As the reason for increasing the consumption tax rate, the budget policy outline states, “Every generation should equally share the cost required for social security benefit payments and measures dealing with the declining birthrate.”

The consumption tax was introduced in 1989 on the grounds of supporting social welfare services. However, while carrying out adversely revisions in social welfare programs, subsequent governments have used the increase in tax revenues through the consumption tax to make up for the fall in corporate tax revenues.

The outline also called for “labor market reform” as a pillar of the policy to “raise per-capita productivity.”

This “reform” is nothing but the “Labor Big Bang” that business circles wish to implement.

Big business circles have been calling for an introduction of the “white-collar exemption” system under which employers are not required to pay workers overtime allowances and can force workers to work long hours which would increase number of deaths from overwork.

In fact, Prime Minister Abe Shinzo himself has been stressing the need to introduce such a system.

The “Labor Big Bang” will also relax further the regulations in labor legislation such as the legalization of the “disguised contract labor” and the unfair dismissal of workers in return for a small amount of settlement money.
- Akahata, June 20, 2007