business

Most Japanese firms back planned sales tax hike to fix debt woes

18 Comments
By Tetsushi Kajimoto and Izumi Nakagawa

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18 Comments
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It is great how these companies are so quick to allow the consumption tax to rise, but if the LDP said they were going to raise the corporate tax rate, they would be screaming bloody murder. Why doesn't the gov't try the structural reforms they keep promising to help bring down the debt, instead of just wasting taxpayer money on frivolous things like the Olympics and other money losing activities.

6 ( +7 / -1 )

Normal countries can levy a zero tax rate on food which everybody has to buy. Can't do it in japanthough as too complicated said the "government". Hopeless.

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MarkXMay. 27, 2015 - 07:24AM JST

It is great how these companies are so quick to allow the consumption tax to rise, but if the LDP said they were going to raise the corporate tax rate, they would be screaming bloody murder

It would be even nicer if they paid even the present tax, which 70%of them don't.

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of course, that gives them another excuse to raise the prices more. bah

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This is insane! If they want to raise the consumption tax, fine!! BUT we expect a SIGNIFICANT rise in minimum wage. If that doesn't happen, people will buy less, which means that prices will fall, which in turn means less tax revenue for the government, and you're back to square one, but with an even unhealthier economy.

Noriko Hama had it right: raise the minimum wage, and you will see inflation, a more robust economy, and higher profits for companies as customers sprinkle money their way.

2 ( +3 / -1 )

A more accurate headline for this article would be "Turkey's Vote For Christmas". Any executive or businessman who thinks it's in his company's interest for his customers to have their purchasing power taken away should be removed from their position immediately. Total ignorance and incompetence.

-3 ( +3 / -6 )

Two-thirds of Japanese firms support the government’s plan to boost the national sales tax in 2017 and almost half believe big hikes in the future will be necessary to combat the country’s ballooning debt, a Reuters survey shows.

A sales tax rise in 1997 has been blamed for helping to create a long-lasting deflationary mindset

But a tax rise increases prices, not decrease them.

These blamers may intend to assert that tax hikes cooled the economy, and thus created the "deflationary mindset" (as an aside, Japan has had very mild deflation, at worst).

But the tax was introduced in the first place because the government was spending beyond its means. Therefore, any "deflationary mindset" would stem from excessive government spending binges that led to the tax hikes, not the tax hikes.

Always important to have the cart before the horse. We shouldn't shoot the horse just because some clown put it behind the cart.

sales tax hikes represent stable government income to pay for snowballing welfare costs as the population rapidly ages.

Very crucial point. Income and corporate taxes fluctuate widely depending on the economy. Sales tax is also fairer since those who do not pay income tax also contribute to funding social services that they receive benefits of. With Japan's demographics as they are, this is important for inter-generational fairness and equality.

citing potential turmoil in financial markets and a negative impact on the economy if Abe forgoes it again.

Japan has no easy options. This is the risk government takes by recklessly spending beyond its means.

A slim majority - 54% - thought increases to the sales tax should stop at 10% or less.

Implying they must favour massive spending reforms, instead of even higher taxes. Very agreeable.

MarkX,

if the LDP said they were going to raise the corporate tax rate, they would be screaming bloody murder.

Making businesses less profitable wouldn't be much help for anyone, though.

umbrella,

Normal countries can levy a zero tax rate on food which everybody has to buy. Can't do it in japanthough

Well it's a dopey idea to impose a sales tax, and then give everyone (including the middle class, upper middle class, and the wealthy) a tax break.

If the idea is to help the poor, just give the poor some targeted assistance.

Japan is certainly not the only place keeping it simple, Singapore, New Zealand I believe also do it this way. If anything it has been one of the few policy settings Japan has right.

Aly Rustom,

This is insane! If they want to raise the consumption tax, fine!! BUT we expect a SIGNIFICANT rise in minimum wage.

But hiking minimum wages means younger people without skills finding it harder to get that first job. Businesses are not welfare schemes. The government should handle welfare, not mandate businesses to implement it.

1 ( +1 / -0 )

¥0

Food (Not cookies, cream puffs, doughnuts etc.) Real food. Diapers Medicines Doctor/Medical/Hospitalization etc. School Uniforms/Books/Fees including pre-school Gasoline/Diesel for Business Trucks/Repairs Glasses/Hearing Aids/Canes etc. Commuter Passes Home Utilities

The Government needs to be educated about regressive taxes, go on line and see how other countries do it. Not take an entourage to other countries on the dole to see how it is done.

Tax Everything Else

0 ( +1 / -1 )

The Government needs to be educated about regressive taxes

The government knows all about it.

Please realise that giving the middle class, upper middle class, and wealthy class ALL a tax cut on their "essential food" etc would be forgoing a lot of sales tax revenue that could be used to fund targeted assistance for the poor. Non-poor people do consume a lot of "essential food", that's a lot of sales tax revenue.

1 ( +1 / -0 )

Please realise that giving the middle class, upper middle class, and wealthy class ALL a tax cut on their "essential food" etc would be forgoing a lot of sales tax revenue that could be used to fund targeted assistance for the poor.

Nice little bit of sophistry there, only one problem. It's all fiction. Japan does not fund itself with sales taxes, it funds itself the way all currency issuing countries fund themselves, by issuing currency when it spends. And this is true regardless of the political orientation of the issuing government, from wacko RW Libertarian governments to wacko LW communist government. Taxes exist to control the money supply (a throwback to the Gold Standard days) and to influence the direction of economic activity. They fund nothing. As always, any flat-earthers who doubt that are free to explain where the taxpayer gets his yen / dollars / pounds etc. from to fund their government with. Their basement counterfeit machine?

The real problem is that the flat-earthers are not limited to internet comments page as many hold high level positions of authority, both in Japan and around the world. If their fantasy view is due to lazy ignorance then they are guilty of professional negligence and should be immediately removed from their position. If it is because their ideological beliefs in the role of government require them to deny reality, they are guilty of criminal fraud, and should sent down the river where they can spend their time studying up on economic history and basic logic.

-4 ( +2 / -6 )

of course they do, there tax rates are going down, so the average Taro will pay the shortfall plus extra.

-1 ( +0 / -1 )

"debt woes"

What are these "woes," exactly? Can someone give me a tangible example of the "woes" that Japan's fiscal debt has created? I'm talking hard evidence or something that has actually happened, not speculation or theories that haven't happened.

"We have nothing to fear but fear itself."

-2 ( +0 / -2 )

What are these "woes," exactly?

You'll be waiting a long time for an answer to that question, on account of there isn't one. A more answerable question would be "Who exactly is constantly pumping out this fear-mongering, economically illiterate propaganda and how exactly do they hope to benefit and profit from it?" The answer is that Japan is intentionally being pushed into taking actions to vandalize and sabotage its own economy. The various financial vultures, both domestic and foreign, will then claim that only they have the "solutions" to the "crisis" that they themselves manufactured and they will then pick over the carcass for fun and profit. That is the sole purpose of the global government debt obsession and the austerity "solution". Textbook Disaster Capitalism 101, been going on everywhere for years now, and now it's Japan's turn.

-2 ( +1 / -3 )

GJD, as I have noted before, there is another alternative and that is that it may just be that the "theory" (if I can call it that) you are ferociously peddling on these internet comments pages is entirely wrong.

JeffLee, I suggest trying to read and comprehend the article, and answering the question why the Fukushima nuclear plants suffered meltdowns.

0 ( +1 / -1 )

@fxgai Reality is not a "theory". Money does not fall from the sky, it is created by a human designed and engineered system that has operated for 1000's of years and is not difficult to understand by anyone who doesn't have their brain set on "setsuden". It is also a system that is very profitable to operate dishonestly, as has been the case globally since 1971 when the gold standard was completely abandoned. Any economic theory or political ideology that denies that reality is completely worthless and probably criminal in origin.

And as always, you are welcome to try to answer that question that you never seem able to get around to answering. Where does the Japanese taxpayer get the yen that he/she "funds" the Japanese government with?

-3 ( +1 / -4 )

You'll be waiting a long time for an answer to that question, on account of there isn't one.

Ah yes, because Japan is "special", and not like other states throughout history that have wound up in ruins.

The answer is that Japan is intentionally being pushed into taking actions to vandalize and sabotage its own economy.

Textbook Disaster Capitalism 101, been going on everywhere for years now, and now it's Japan's turn.

I could swear you seem to think Japan's economy is "firing on all cylinders" or something. What a showcase it has been for the past quarter of a century, while it's massive public debts have suddenly been accumulated?

Reality is not a "theory".

Your fantasy is not reality.

Money does not fall from the sky,

And it is not all created by government spending, as you have constantly claimed (even while frequently contradicting yourself).

0 ( +1 / -1 )

So fxgai was asked two questions on this thread. 1) to give real world tangible examples of the "woes" created by Japan's level of "debt", and 2) (and not for the first time) to explain where he thinks the Japanese taxpayer gets the yen to "fund" the Japanese government from. As seen above he couldn't answer either (for question 2, also not for the first time).

Instead, we get a couple of straw man rants claiming that Japan will end up in ruins because other countries in history have ended up in ruins. Indeed they have, and for many different reasons. Not one of them applicable to 21st century Japan. Then the statement that people who question his libertarian comic book analysis of the economy are claiming that Japan's economy is "running on all cylinders". Actually, that claim is nowhere to be seen. What is claimed quite clearly is that Japan's, and in fact all advanced global economies, are NOT running on all cylinders, and that policies based on economic ignorance are making things even worse.

And then to top it off, we are informed that "NOT ALL (money is) created by government spending". Wow, he got something right. Yes, some money is created by bank loans, and when the economy can no longer increase the amount of bank loans that's when trouble starts and government "debt" starts to rise. But of course, that explanation of how things actually work does not appear in the economic "theory" presented in the textbooks to the young experts in ECON 101, so must be wrong. It is just easily demonstrated and empirically proven reality. Much more important to rant on about government debt and how the bogeyman is gonna get you.

0 ( +1 / -1 )

GJD,

1) was a meaningless question. I've tried in vain to illuminate JeffLee before, but for your benefit (perhaps), thinking along those lines is like someone proclaiming the benefits of the Fukushima nuclear power plants, pre-2011.

Yet, as you are presumably aware in hindsight, a "risk" came to fruition, despite all the wonderful electricity that had been generated up to that point, without incident.

Sound familiar?

Thus a more pertinent question from JeffLee would be not what woes there are or have been, but what risks there are.

JeffLee and yourself both appear to be in complete denial about this, and thankfully (also understandably) people like you are not running the show, but merely commenting on an internet comments page.

2) was a basic question that anyone knows the answer to, so if you want to ask a question that cuts to the chase you ought to just do so.

policies based on economic ignorance are making things even worse.

Mercifully, at least they aren't based on your theories though, for then things would be truly horrid.

And then to top it off, we are informed that "NOT ALL (money is) created by government spending".

That statement was a cut to the chase on your 2nd question, don't you know.

Yes, some money is created by bank loans,

That's right, although you previously claimed only the former, while subsequently contradicting yourself with an admission of the latter.

If you want to peddle your theory, I suggest you get your own story straight first, before just constantly posting diatribes about how all the people in power are completely ignorant about their jobs. Your theory needs to be consistent at least, if you are actually trying to peddle it to others.

0 ( +0 / -0 )

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