消費税率 「来春の8%」は見送るべきだ

The Yomiuri Shimbun September 1, 2013
Govt should shelve sales tax hike to 8% in April to guard recovery
消費税率 「来春の8%」は見送るべきだ(8月31日付・読売社説)


The most imperative issue for the Japanese economy is to overcome deflation. If an increase in the consumption tax rate dampens the economy, which has finally begun to recover, it will ruin the whole situation.

The government should shelve the planned hike in the consumption tax rate to 8 percent in April next year. Rather, it would be a realistic choice to raise the tax rate from the current 5 percent to 10 percent in October 2015 after achieving a full economic recovery.

The government has been holding intensive discussion sessions to hear a wide range of opinions from experts and others over the advisibility of the planned increase in the consumption tax rate.

Achieve growth, fiscal health

It was a matter of course for Prime Minister Shinzo Abe, who is expected to make a decision on the tax hike this autumn, to say: “I’ll ultimately decide on my own responsibility. After getting the results of the discussions, I’ll try to make a proper judgment taking into account a variety of economic indicators.”

Japan has been suffering from deflation for 15 years and running huge fiscal deficits. If economic stagnation continues for a prolonged period, Japan’s strength might be further weakened.

How can the nation defeat deflation and achieve both economic growth and fiscal reconstruction? What is required for Japan are concrete measures to tackle these difficult problems.

The Yomiuri Shimbun has insisted on the necessity of raising the consumption tax from the standpoint that the nation needs to secure fiscal resources for social security expenditures, which are growing year by year, and get its fiscal condition in sound shape in the medium term. We maintain this stance.

Many of the experts and others participating in the discussions have argued in favor of raising the tax rate next spring as planned, but the question is whether that is the right time to raise the tax.

The nation’s real gross domestic product for April-June rose only 2.6 percent on an annualized basis. Although the effects of the Abe administration’s Abenomics economic policies have begun to be seen, it is far from what we could call a self-sustaining recovery led by private-sector demand.

It is a cause for concern that the nation has not yet achieved a virtuous cycle of Abenomics in which growth results in higher wages and more employment.

Next April will be a crucial time, particularly as companies may decide to increase wages after the annual spring labor offensive and may decide to expand their recruitment of new graduates for 2015. Cold water must not be thrown on progress leading toward a virtuous cycle.

Surely, a consumption tax rate hike alone will not help the nation achieve fiscal reconstruction. There are fears that if the economy loses steam with the tax hike, it could mean that tax revenues from such sources as corporate and income taxes will not increase as much as expected. Such a scenario would rather push fiscal reconstruction further into the distance.

Although the government this autumn plans to hammer out additional economic measures, including a tax cut to stimulate investment, as part of its growth strategy, it will take time for these policy measures to produce tangible results.

Aim for 10% in ’15

If the consumption tax rate cannot be raised to 10 percent in 2015 as a result of adhering to the plan to increase it to 8 percent next April, that will be an inversion of Japan’s priorities.

Some people, on the other hand, have expressed concern that if the tax hike is postponed, confidence in Japanese government bonds will drop, leading to a rise in long-term interest rates.

What matters is whether the government can send a strong message that will dispel such fears. The government is urged to seek understanding both at home and abroad by announcing that postponing the rate increase to 8 percent is the result of its giving top priority to ending deflation and that its committ-ment to fiscal reconstruction will not falter in the least.

A matter to be tackled in this connection is how to secure fiscal funds to make up for tax revenue that will be lost by putting off the tax hike. It will be necessary to curtail nonurgent spending while considering all possible measures.

One policy could be to make effective use of untapped household assets by issuing government bonds that do not bear interest but are exempt from inheritance tax on their face value. The funds to be collected widely could be used on a priority basis for social security programs and measures to prevent and reduce disasters.

Steps to reduce burdens

When the rate is raised to 10 percent in October 2015, it will be indispensable to consider measures to lessen the burden on the public. We suggest the government introduce reduced tax rates on certain items and that the current tax rate of 5 percent be maintained for foodstuffs such as rice and miso paste as well as newspapers, which are public goods necessary to sustain democracy.

We cannot agree with increasing the consumption tax in increments of one percentage point because it will vastly increase the administrative work for small and midsize businesses and make it difficult for them to reflect the tax increase in their product prices.

When deciding on a tax increase, it is necessary to keep a close watch on the world economy.

As tensions have risen in Syria, U.S. military action is looming as a possibility. Crude oil prices have already been soaring, while the strong yen and low stock prices have continued. With no prospect in sight of restarting of nuclear reactors, further rises in utility rates can be anticipated due to escalating fuel costs.

The U.S. “exit strategy” of phasing out its unconventional monetary easing measures and China’s financial risks can be regarded as destabilizing factors.

When the consumption tax was raised from 3 percent to 5 percent in April 1997, business suddenly slowed down due to the double blow of serious financial uncertainty and the Asian monetary crisis. This was a bitter lesson to learn.

The government is urged to closely examine domestic and foreign affairs, and make an appropriate decision so as not to miss the chance to revitalize Japan.

(From The Yomiuri Shimbun, Aug. 31, 2013)
(2013年8月31日01時31分 読売新聞)

by kiyoshimat | 2013-09-02 06:17 | 英字新聞

<< 防災の日 被災地の声を対策に生かそう 悪ふざけ投稿 ネット交流に潜む... >>