A plan to introduce a new tax to be imposed on anyone leaving Japan is expected to be included in the ruling coalition's outline for tax system revision, which is to be concluded by the end of this week. The government aims to launch the new tax in 2019.
What a quick and easy way to collect taxes. Regardless of nationality, any traveler leaving Japan would be subject to extra fees of up to 1,000 yen, which would likely be added to the price of their plane tickets. Those involved in drawing up the plan might have assumed that if the "exit tax" was collected together with travel fees, it would be discreet, and if it was only about 1,000 yen, travelers wouldn't mind.
However, the key issue here is what the exit tax will be used for.
The introduction of the new tax was proposed following discussions at a Tourism Agency expert panel. According to the agency's apparent logic, to further increase the number of inbound tourists, which keeps hitting record highs, various promotion measures will be necessary, but central and local governments are facing financial difficulties. They thought a new tax could fix this problem.
A calculation of the 1,000 yen exit tax per person based on the number of travelers last year gives roughly 40 billion yen in revenue -- double the initial budget for the Tourism Agency.
The argument that the exit tax revenue will be "used for tourism promotion" is way too vague.
The report concluded by the expert panel says that it is inappropriate to limit the use of revenue from the new tax and that a system should be developed in such a way that it could be used somewhat extensively. In other words, the introduction of the exit tax did not come about based on the logic that a new tax is the only way because some specific measures cost this much.
The revenue from the new tax will likely increase with the growing number of travelers, but it also raises concerns that the income could be used for unnecessary spending as government bodies try to use up their budgets.
The report also touches on "revitalization of local economies" as possible contributions that could be made by the introduction of the new tax. Many municipalities in Japan fighting declining populations have high hopes for tourism as a trump card to stimulate their economies. There is concern, however, that the new financial resources could be used for pork-barrel projects under the name of "local tourism promotion."
The tourism industry is of course important for a country. There are similar taxes and fees to the exit tax in other countries. Even so, the creation of new financial resources with no firm amount or usage plan is hardly acceptable.
Japan's finances face extreme difficulties. And if the government argues that spending on tourism promotion is a must under such circumstances, it should include the revenue from the new tax in the general account budget, which does not specify the use of tax revenue, and then make a separate demand for related allowances in a budget request.
Amid the steady increase in the number of inbound tourists to Japan, tourism has grown to become one of the country's main industries on par with financial businesses. According to the World Economic Forum's Travel and Tourism Competitiveness Report 2017, Japan ranks fourth among 136 nations. It might be wiser for the government to leave tourism promotion measures to the private sector, as well as their funding.