politics

Business lobby head urges gov't to cut spending

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By Stanley White and Izumi Nakagawa

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“We need some type of spending cuts, most likely for health care spending,” said Yoshimitsu Kobayashi, chairman of the Japan Association of Corporate Executives. “If you try to rely on economic growth alone, the math just doesn’t add up.”

Why don't we instead cut your public works pork barreling projects and make sure that you all pay corporate tax, instead of the present only 30% of Japanese companies, by determining it on net income earned in a financial year, instead of only on net profit made in a financial year, like nearly every other country in the developed world?

Didn't think you'd go for that.

Oh well let's carry on bashing and taking from the old, weak and less fortunate of Japanese society. After all zis izu the time of Abenomics.

6 ( +10 / -4 )

“If you try to rely on economic growth alone, the math just doesn’t add up.”

Music to my ears.

Why don't we instead cut your public works pork barreling projects

That should be cut too, but if one does the maths, one finds that cutting the corporate pork barrel projects doesn't come anywhere near enough.

The biggest pork barrel is excessive government spending on it's citizens, who don't bear a proportionate burden in tax for the services they receive. Either their taxes need to go up, or the services need to come down.

and make sure that you all pay corporate tax, instead of the present only 30% of Japanese companies, by determining it on net income earned in a financial year, instead of only on net profit made in a financial year, like nearly every other country in the developed world?

Tell me more about this one please, Gary?

1 ( +2 / -1 )

Whaaaaat? Abe's JUST getting started! Ask him to reign things in??

-2 ( +1 / -3 )

What a elitist Yoshimitsu Kobayashi San is. Cutting heath spending is like missing a major service on your car. Eventual you end up paying more then what the service fee would cost. I bet you that Yoshimitsu Kobayashi San would not miss a major service on his Maclaren

0 ( +1 / -1 )

“We need some type of spending cuts, most likely for health care spending,” said Yoshimitsu Kobayashi, chairman of the Japan Association of Corporate Executives. “If you try to rely on economic growth alone, the math just doesn’t add up.”

Will never happen since bureaucrats put together the budgets as well as all the major legislation in Japan.

However, it is still uncertain whether the government can consistently meet its target of 3% nominal GDP growth, so it is too risky to delay spending cuts, Kobayashi, head of the business lobby which is also known as Keizai Doyukai.

3% nominal GDP growth. LOL. Simply will not happen, and hasn't happened for any sustained period of time in Japan in over two decades.

0 ( +3 / -3 )

“If you try to rely on economic growth alone, the math just doesn’t add up.”

Guess he has never heard of the 30 years globally after the Second World War when that is exactly what happened. But of course, that is before the geniuses came along to "fix" things with their "magical marketplace" economy. And pigs will fly before Japan has a primary surplus. It's mathematically impossible without growth in private debt, and lack of growth in private debt is the cause of the problems in the first place.

Japan’s bond yields are low now because the Bank of Japan is buying government debt as part of quantitative easing strategy to guide consumer prices up to its 2% inflation target.

Japan bond yields have been low for decades regardless if the BOJ was doing quantitative easing or not. There is no connection, anybody claiming there is is just making stuff up.

-5 ( +1 / -6 )

Kobayashi-san is spot on with his comments. The math doesn't add up because the entire economic plan is a scam. Abenomics, massive public spending ("fiscal stimulus"), and the 2020 Olympics were never about jumpstarting the economy and reducing the national debt. They were used as tools for corruption and illegal financial kickbacks for the LDP politicians. They borrow against future tax revenue and spend the money on unnecessary pork belly projects which get awarded to their cronies in the construction industry. After they're all dead, future generations of Japanese will be left repaying the huge public debt. In the meantime, Abe and the LDP government cry poor mouth and insist they have no other choice but to raise consumption tax again. All the while the government spends, spends, spends. It makes me sick to see the LDP get away with it.

5 ( +6 / -1 )

I still feel that the sale tax should be 15% and should be extended to all items include service. it is the only way to get the wealthy to pay tax.

-2 ( +0 / -2 )

If economic growth and consumer prices improve in line with policymakers’ forecasts, it would be natural for bond yields to rise, Kobayashi said.

I wonder what the original Japanese word was here. An increase in consumer prices is the polar opposite of an improvement for the general public. Economic growth is great -- but this false connection between growth and higher consumer prices, which the Abe government has been propagandizing for the last 2 1/2 years, is nonsense.

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Why don't we instead cut your public works pork barreling projects and make sure that you all pay corporate tax, instead of the present only 30% of Japanese companies, by determining it on net income earned in a financial year, instead of only on net profit made in a financial year, like nearly every other country in the developed world?

Companies in Japan earn little profit, a great deal earn no profit at all. A great deal of them are in debt, most are overstaffed, staff are underpaid. Compared to developed countries, executives and senior managers in Japanese companies are relatively low-paid.

With the population falling signficantly, the domestic market is drying up. Jaoanese companies have long depended on the domestic market for more than half their sales. The export market is also drying up, as other countries in Asia produce quality goods for much less money.

It isn't lack of taxes which is behind Japan's debt burden. Japan's corporate tax is the second highest in the world, and the corporate tax is only one of many which must be paid. 70% of Japanese companies pay no corporate tax because 70% of Japanese companies earn no profit. But they pay other taxes, as do their employees and customers. Just because your employer earned no profit doesn't excempt you from your own income and residency taxes, nor is anyone excempted from the consumption tax.

Then we can't forget the less obvious taxes and policies which drive up the cost of living. The taxes and fees associated with driving cars are outrageous. Money spent on these fees is money which cannot be spent on other things, and those companies which produce those things make less money to tax and pay their staff. The tariffs on imported goods drive up the costs to consumers, which causes them to have less money to buy other things, which has the same effect.

If the government increases taxes on companies or anyone else, the result is that the private sector will have that much less money to spend; economic activity will decrease, GDP will shrink, deflation will continue, unemployment will rise, revenues will shrink, and the debt will increase further.

2 ( +2 / -0 )

sangetsu03 MAY. 28, 2015 - 06:15AM JST It isn't lack of taxes which is behind Japan's debt burden. Japan's corporate tax is the second highest in the world, and the corporate tax is only one of many which must be paid. 70% of Japanese companies pay no corporate tax because 70% of Japanese companies earn no profit.

The problem is that law generally allows companies to not record or pay taxes on profits earned by overseas subsidiaries if the money isn't brought back to the Japan. Large and small Japanese companies are booking more of their sales in faster growing foreign markets. But companies also are moving more of their earnings overseas by assigning valuable patents and licenses to foreign units. Japan has over 20K companies in China alone. Untaxed foreign earnings are part of a contentious debate over Japan's fiscal policy and tax code. Moreover, tax rates are higher in Japan than in many other nations, putting Japanese companies at a disadvantage.

0 ( +0 / -0 )

The problem is that law generally allows companies to not record or pay taxes on profits earned by overseas subsidiaries if the money isn't brought back to the Japan.

And they shouldn't be taxed on profit earned overseas if the money is not brought back to Japan. Tax is paid on profits in the country where profits are earned. Japan has borders, and it's laws and taxes should apply only within it's borders. Japan could start taxing profits earned overseas, but then other countries could start taxing profits their companies' profits in Japan, and the end result would be even more money looted out of the private sector to be squandered by politicians and their cronies. Rather than decreasing debt, increased revenue would be spent. What happened last year when Japan discovered surplus funds in many of it's government accounts? Was the money used to help pay down debt? No, it was immediately spent.

Moreover, tax rates are higher in Japan than in many other nations, putting Japanese companies at a disadvantage.

Whose fault is this? The world is a competitive place, and governments who want to succeed are going to have to compete to bring businesses to their countries, or keep businesses from leaving. I own a company in Japan, and am subject to Japan's 35% corporate tax. If I moved to Singapore, my tax rate would be only 15%. Compare Singapore to Japan. Despite taxes which are a fraction of what they are in Japan (everyone pays 15%), and the entire country is one-fourth the size of Tokyo, GDP per capita is 40% higher than Japan.

1 ( +2 / -1 )

Why don't we instead cut your public works pork barreling projects

Agreed! Let's start with the money used to fund whaling. Move on to the propping up of zombie banks, and finish with BS construction projects.

This insanity about cutting health care spending is unbelievalble. If you remove that safety net, people will be apt to go out and spend money even less; that would be another dent in their wallets and that means less of a stimulus for the economy. People already feel insecure enough. Loss of health care could bring about panic.

0 ( +1 / -1 )

What a elitist Yoshimitsu Kobayashi San is. Cutting heath spending is like missing a major service on your car.

The point is not so much about cutting services, but about who pays for those services and if it's fair.

Should today's elderly folks, sitting on fortunes amassed during Japan's 20th century heyday, pay more for their own health care, or should today's children pay for it when they reach the shrinking workforce years from now?

sfjp330,

The problem is that law generally allows companies to not record or pay taxes on profits earned by overseas subsidiaries if the money isn't brought back to the Japan.

Don't they pay taxes to overseas jurisdictions on those profits made overseas?

Moreover, tax rates are higher in Japan than in many other nations, putting Japanese companies at a disadvantage.

At least the government is moving to make it's tax rates more internationally competitive, and then more business might be done here, but the government should also get the rump into gear and implement those 3rd arrow reforms to improve the business environment more broadly.

Aly Rustom,

Let's start with the money used to fund whaling.

A drop in the ocean, excuse the pun. Money spent on whaling is trivial, maybe a few hundred million yen? To bring it up in the debate about debt is just a distraction.

Japan's debt problem is not about hundreds of millions of yen, but tens of trillions of yen.

This insanity about cutting health care spending is unbelievalble. If you remove that safety net,

No need to remove the safety net. But spending millions of yen on people who are sitting on tens of millions of yen in their own personal savings is not a "safety net", it's an election bribe. People who can afford to take care of themselves should not be getting all this welfare from other people working hard and still struggling to get by.

Loss of health care could bring about panic.

If you have 50 million yen in the bank, you are not going to panic just because you have to start paying your own way.

0 ( +0 / -0 )

who pays for those services and if it's fair.

OK, so two elderly folk, similar careers, similar incomes while working; one scrimped and saved and amassed a 'small fortune' for his old age, the other spent it all on sake, onna and enka and is now penniless. Is it fair that the careful one be means-tested for the pension he's paid into and for every minor ailment, while the profligate (who due to his lifestyle is probably in much worse physical condition and a more frequent caller at the local clinic) gets free/subsidised health care and a full pension because he's one of the 'deserving poor'?

Money spent on whaling is trivial, maybe a few hundred million yen?

Why say maybe when the figures are just a click of the mouse away?

http://www.ifaw.org/sites/default/files/economics-of-japanese-whaling-japan-ifaw.pdf

Subsidies average around ¥782 million (US$9.78 million) annually.

Over the past 25 years, direct whaling subsidies from the Ministry of Agriculture alone have cost Japanese taxpayers more than ¥30 billion (almost US$400 million).

earthquake reconstruction funds to the tune of ¥2.28 billion (US$28.55 million) were diverted from tsunami relief to support “research whaling, stabilization promotion, and counter- measure expenses”.

And that doesn't include the cost of refitting the factory ship or the cost of sending a legal team to argue the case for 'research' whaling at the ICJ.

-3 ( +1 / -4 )

Look we all know that the wealthy avoid paying their fair share of tax. You have to remove these tax breaks on the wealthy in our society. I am not demanding to over tax the wealthy just get them to start paying their fair share of tax. WIth this money the government can afford to spend on free education for single mothers and young adults who have no funds to continue their education. The young population is a under value commodity that going to have to carry the burden of this ageing society. In 20 to 30 years time this ageing population will place a load on today young people and education is the best way lesson this burden.

-1 ( +0 / -1 )

cleo,

Yes, there's a moral hazard there, and that's a fair point.

But the existence of moral hazard doesn't justify ongoing unsustainable spending by the government, in my opinion, as the latter could ruin things completely for everyone if risks did come to fruition.

Why say maybe when the figures are just a click of the mouse away?

I said maybe because I didn't know beyond a ball park figure, and it's an irrelevance in the context of Japan's quadrillion yen of public debt, as your figures confirm. (It was three drops in the ocean, not just one, so I wasn't far off)

30 billion yen over quarter of a century may be an issue, but Japan has bigger fish to fry if it's going to address its debt woes.

John-San

Look we all know that the wealthy avoid paying their fair share of tax.

Who in Japan, specifically, are you talking about?

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Japan to give Y55 bil to Pacific island nations to fight climate change

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Stop spending money to other countries. Also stop donating anything to UN/

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