Posted on 12/12/2002 7:50:26 PM PST by altair
The ruling Liberal Democratic Party agreed in principle Thursday on a tax reform plan for fiscal 2003 that features some 2 trillion yen in tax cuts mainly for companies and higher taxes on tobacco and some liquors.
Earlier in the day, the LDP's coalition partners -- New Komeito and the New Conservative Party -- gave the greenlight for tax hikes on tobacco and liquor.
The ruling triumvirate is expected to finalize the tax reform plan Friday, said Sohei Miyashita, a senior member of the LDP's powerful Tax System Research Commission.
"We want to get rid of deflation by all means," Miyashita told reporters. "To that end, we want to revitalize the economy with the help of the tax reform."
After political maneuvering within the ruling coalition, it decided to raise the tobacco tax as well as taxes levied on wine and low-malt "happoshu" beer to help cover tax revenue shortfall.
Consumers will have to pay 10 yen more for 350-milliliter cans of happoshu and 10 yen more per 720-milliliter bottle of wine. Both taxes will start being levied on May 1.
The tobacco tax will be raised by 1 yen per cigarette July 1, which translates into a 20 yen hike per pack.
Revenue from the higher tobacco and liquor taxes is expected to amount to 200 billion yen.
The New Conservative Party opposed raising taxes on the popular products, saying it is not favorable to levy them on goods enjoyed by the public. As a result, the size of the tax hike was scaled down from an initial proposal.
Meanwhile, the tax commission agreed on deductions for companies that conduct research and development, allowing them to deduct up to 12 percent of their R&D costs from the corporate tax.
Companies that invest in plants and equipment related to information technology will also be able to make deductions. As a way to boost the stock market and asset transactions, the LDP has decided to reduce the tax burden on those who trade stocks and other financial products, as well as land and other fixed assets.
On the other hand, the commission decided to narrow tax deductions currently granted to salaried workers with spouses or children aged between 16 and 22 on income tax.
The scaling down of the tax deductions is to be applied to income gained after 2004.
Meanwhile, New Komeito is demanding that allowances be increased for those who have children in exchange for narrowing the tax deductions granted to salaried workers with children.
The LDP also decided to introduce the controversial pro-forma tax levied on companies based on business scale, such as the size of their capital and number of employees.
The commission decided to adopt the tax while exempting smaller firms that have capital of less than 100 million yen.
The pro-forma tax drew sharp opposition from the business sector and lawmakers within the ruling coalition, who oppose more levies on companies amid the stagnant economy.
Leaders of LDP's three economic committees expressed opposition Thursday to the introduction of the pro-forma tax, saying it would weaken the country's economic competitiveness.
The Japan Times: Dec. 13, 2002
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Revenue from the higher tobacco and liquor taxes is expected to amount to 200 billion yen.
Thank you sir! May I have another?
Still, it would be nice if they simply cut all taxes without raising any others.
An extremely high percentage of Japanese drink, but specifically targeted tax increases can be avoided.
Still, it would be nice if they simply cut all taxes without raising any others.
Yeah. They haven't figured that out. Still, there's a different reaction to taxes here. The LDP leader (I forget his name) who instituted the national sales tax died a year or two ago. In the write ups about his past it was noted that he always told people that his proudest accomplishment in politics was the creation of that tax. National sales tax proponents in the US beware -- you can easily get the worst of both worlds, a national sales tax and an income tax.
The best incremental tax reform would probably be reducing the national sales back to its original 3% and leaving everything else alone for the time being. That would stimulate the economy and should increase the total amount of taxes collected.
I'll have to explore that more thoroughly. I have a friend here (also from the US) who has done it before.
On the other hand, Konishiki's American VISA card commercial is one of my all time favorites. But I guess that's a Japanese (American) celebrity doing one in America.
(I haven't seen the Arnold ad since 1999, btw.) Yes, it is amazing. The very first piece of junk mail I got was a flyer with the smiling face of Celine Dion advertising an English conversation school.
On the other hand, Konishiki's American VISA card commercial is one of my all time favorites. But I guess that's a Japanese (American) celebrity doing one in America.
Never seen that one. I like Konishiki's "Mrs. Lawson" commercials.
Ewwww.
What's it taste like? Or is that a question I'm not supposed to ask?
I'm going home. Have a good weekend.
Add bathtub gin, F. Scott Fitzgerald, speakeasies, and flappers, and Japan might actually not be depressed anymore. ;)
Regards, Ivan
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