Japan Press Weekly

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2010 June 30 - July 6 [FINANCE]

Kan makes deceptive remarks on consumption tax hike

Because Kan is worried about public criticism regarding his intent to increase the consumption tax rate to 10%, he suddenly announced that he will refund low-income earners the total sum of consumption tax they paid on goods and services during each year. This announcement was made on June 30 when Kan visited local cities to deliver street-speeches for the ongoing House of Councilors election campaign.

However, regarding a limit on the annual income per household to obtain a full refund of the consumption tax, Kan was announcing different limits at different locations.

When he started his street campaign in Aomori City on the morning of June 30, he said that a household earning of less than three million yen a year will be eligible to receive a full refund of the consumption tax. In Akita City in the same afternoon, the figure was raised to 3.5 million yen. Then, in the evening in Yamagata City, the limit on the annual income went up to four million yen.

Moreover, as for a five percent increase in the consumption tax, Kan at first said, “It’s OK to recognize my plan to increase the consumption tax to 10 percent as part of the party’s election platform.” However, facing public criticism and a sharp drop in the public support rate for the Kan administration, he changed his stance, saying, “What I was actually saying was that I called on political parties to start a discussion about a consumption tax hike.”

The Prime Minister began to use the tax refund idea depending on a family’s annual income as a vote-getting ploy. This reveals that the Prime Minister himself recognizes the fact that the consumption tax imposes heavier financial burdens on lower-income earners and hurts their livelihoods.

Households with an annual income of less than four million yen, which Kan mentioned in his speech, make up 46.5% of Japan’s total number of households. If half of Japanese households need to receive the consumption tax refund, the Kan government should give up increasing the consumption tax in the first place and implement a progressive tax system.
- Akahata, July 2, 2010