Japan Press Weekly

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2016 June 15 - 21 [POLITICS]

Amending premium payments taken as hostage in exchange for heavier sales tax

The argument that the postponement of a consumption tax hike would cause shortfalls in the budget for social security is being presented on TV stations these days. Is this really true?

The Abe government, in the first place, intended to alleviate people’s burden of premium payments in October 2015. The period the people have to pay premiums to be eligible for national pension benefits was supposed to be cut to 10 years from the current 25 years, and low-income earners aged 65 and older were supposed to pay lower nursing-care premiums. However, associated with the decision to push off the date of an increase in the consumption tax rate, the government put off these reductions until April 2017. Then, Prime Minister Abe Shinzo again decided to postpone a tax increase and shelved the plan to implement the two measures as well.

The Abe government is presenting a combination of a tax hike and relief in premium payments as if it took the elderly’s earnest demands as hostages in order to have the general public accept a heavier consumption tax.

Regarding the payment period of pension premiums, no such period exists in France, Belgium, Holland, or Sweden. People in Germany and Italy have to have paid premiums for five years. The 10-year-period applies to the U.K., the U.S. and South Korea.

Japanese Communist Party Secretariat Head Koike Akira showed these examples to the House of Councilors Committee on health and welfare (April 14). In response to Koike, Health and Welfare Minister Shiozaki Yasuhisa had no choice but to say, “I’ve also been thinking that the length of the period over which pension premiums must be paid in Japan is relatively long.”

In Japan, the people receive no pension benefits even if they have paid premiums for 24 years and 11 months. They must complete the full 25 years. The Japanese pension system is extremely defective. Despite this, the present government ardently clings to the tie-up of a tax hike with cuts in premium payments.

The amount of public funds needed to shorten the premium payment period will be 30 billion yen. Another 70 billion yen will be necessary for the full implementation of cuts in nursing-care premiums.

Meanwhile, the increase in revenues from the consumption tax hike from 5% to 8% amounted to 8.2 trillion yen. The government, however, used only 1.35 trillion yen of that for partial revisions in social welfare programs. The rest, 6.85 trillion yen, went toward spending for other purposes.

In short, the government uses practically nothing from the increase in revenues from the 8% tax for social security. One hundred billion yen can make it possible to carry out the two ameliorative measures. What the Abe government is doing is postponing the relief measures until the consumption tax is raised to 10% and refusing to allocate enough funds for social security programs for those in need.

Past related article:
> Abe should acknowledge failure of ‘Abenomics’ and cancel consumption tax hike plan [March 25, 2016]