Editorial: Japan PM's defense tax plan ignores plights of disaster areas, regular people
There has been real pushback from Cabinet ministers and senior members of the ruling Liberal Democratic Party (LDP) against what is in effect a 1-trillion-yen ($7.4 billion) tax hike announced by Prime Minister Fumio Kishida to fund a planned increase of defense spending.
Particularly problematic is a proposal to divert part of a special income tax designed to finance rebuilding after the devastation of the 2011 Great East Japan Earthquake. Currently, 2.1% is added to income tax payments, and the revenues have covered disaster recovery budgets. Under the new plan, half the revenue from this special tax, or some 200 billion yen (about $1.48 billion) per year, would be shunted from reconstruction to defense. Furthermore, the tax would be extended by over a decade from its original 2037 end date.
Looking at this, it would be little wonder if the government was seen as neglecting the disaster-hit areas, where conditions remain severe. Many people from there are still unable to return to their homes more than a decade after the catastrophe, and even in places where things have improved, many properties remain vacant. It is essential to strengthen employment and livelihood support to revitalize the region.
Reconstruction Minister Kenya Akiba emphasized that the extension of the special tax period would mean that "the total amount of rebuilding funds will be maintained." But annual revenue from the tax will be cut in half. If recovery projects are hampered by this lower funding, the burden will fall on the disaster victims.
The purpose of the reconstruction tax is to ensure that all Japan pitches in to support the disaster-hit areas. Suddenly changing its framework and using it to cover defense spending, a completely different goal, is unacceptable, and likely to perplex the people who have been paying it.
If the idea is to raise defense funding using the reconstruction tax just because it has a collection mechanism already in place, it really is a cheap move.
It is also inconsistent with Kishida's statement that he would not take any measures that would increase the income tax burden. The government's position is that there is no contradiction because the tax rate will not be raised, but extending the reconstruction tax is effectively -- and obviously -- a hike.
The reason behind the proposed taxation shuffle is likely concern for the business community, which is worried that the tax burden of greater defense spending will fall inordinately on its shoulders. But unlike corporate taxes, which are paid only by profitable companies, income tax is imposed even on those with low pay. The Kishida government lacks consideration for the lives of the Japanese people, who are suffering from higher prices.
Some ministers opposed to the plan are insisting new defense spending be covered by government bonds. This is an irresponsible attitude that will pass the bill on to future generations amid a fiscal situation already made critical by Japan's massive debt.
If the government wants to effectively raise taxes, it must make every effort to explain the situation to the public and gain their understanding. The prime minister has only mentioned the size of the tax shift and has not provided a rationale for it. Instead, he said, "This is the responsibility of those of us living now, and we must bear the weight of this duty."
All we can say about this statement is that it seems to put the burdens of the planned size-above-all-else defense spending increase solely on the public. If the proposed tax diversion is a way of balancing the books, it is nothing short of opportunistic.