Consumption Tax Increase is Necessity?

For a while before, it discussed for the right or wrong of consumption tax increase in parliament, and many Media also treated. Now, although this policy is decided, let’s think this problem this week.

Influence on Economy

      Minshuto was advancing the proposal which increase tax in April, 2014 8%, and made into 10% in October, 2015. Although it is thought that it becomes about 13 trillion yen tax revenue increases if a consumption tax is raised 5%, but it makes a big impact of Japanese economy. So considering the budget deficit exceeding 1 quadrillion yen of Japan, the increase of income obtained by tax increase is lost only by the interest rates of a national bond going up. The standard household that one of the husband and wife works, the annual income is 5 million yen and two children are is estimated disposable income loses in weight about 310,000 yen in the increase of a burden.

Consumption Tax and Japanese Finances

      It is these days that Greece did fiscal bankruptcy, but doesn't this happen even in Japan? Japan's annual budget deficit is large and the ratio for GDP has become 189% and the largest in the world. Greece is somewhat large grades compared with other advanced nations at 114%.The price of the tax revenues of the Japanese government is about 40 trillion yen. In other hand, governmental finances exceed 90 trillion yen. The expenditure which can be paid for the inner tax revenues is only below half of government expenditure. Other most will be provided with the debt. Therefore, by increasing the consumption tax which occupies many of tax revenues, we have to perform the finances for which it does not depend on a debt. However, when growth of Japanese economy stops and carries out the worst retreat by increasing taxes, it is said that substantial tax revenues doesn’t increase. In order to set off against a 50 trillion yen debt even if there is 2 trillion yen increase of income at 1% as the government has announced, we have to increase no less than 25%.

Consumption Tax of Each Country

      It is said that there are few consumption tax rates of Japan compared with each country. In fact, many countries, U.S., U.K., Italy, German, Netherlands, and Ireland are its tax rates are about 20%. However, the problem is spending a tax also on 10 million yen or more Ferrari which a rich person also buys with a hobby and the 100 yen radish which the grandma of a pension life buys uniformly in Japan. Therefore, in most advanced nations, consumption tax rates were not made uniform, but tax rates are divided into necessary goods, such as food, and not so. Among countries, such as Britain, Ireland, Mexico, and Australia, the consumption tax of food is set as zero. Furthermore, it is only Japan that has applied the consumption tax even to circulation, distribution and manufacture, in the other hand, overseas consumption tax is applied only in the form of finished goods (end product). As a result, Japanese are having forced many burdens than Irish where consumption taxes are 21%.

TPP Participation is Right?

Recently, whether Japan joins the TPP is discussed.
Today, let’s think how our life change if Japan join it.

 What is TPP?

      TPP is abbreviation of trans pacific partnership. The meaning is to cooperation in the pacific countries related economic and military strategy-like. For example, to abolish customs duty, Communalization of medical license, unification of food inspection of quality, etc. So TPP is agreement that enables it to come and go freely across the border, and it unifies the rule and structure about service, food safety and medical treatment, employment, investment, etc. It joins 4 countries, New Zealand, singer pole, Chili, Brunei, and 5 country shows intension of participation, UK, Peru, Malaysia, Australia, and Vietnam.

 

Influence of the Economy

     The three government organizations, Cabinet Office, the Ministry of Agriculture-Forestry-Fisheries, and the Ministry of Economy-Trade-Industry, made the trial calculation of influence when Japan participate in TPP, respectively. Cabinet Office is taking out the optimistic view that GDP increases by 2,400~3,200 billion yen, if Japan participates in TPP. On the other hand, the Ministry of Agriculture, Forestry, and Fisheries said that it becomes very big minus to Japan participate it. Since cheap agricultural products are imported in large quantities, many of Japanese farmhouses stop agriculture, and agricultural-related GDP may decrease by no less than 4,100 billion yen, and may become a 7,900 billion yen loss with whole GDP. Furthermore, 3,400,000 people's employment is lost, and it is expected that a food self-sufficiency rate also falls from 40% to 14%. Ministry of Economy-Trade-Industry says to join TPP becomes profits and not only GDP but also employment lost no less than 812,000 persons. Thus, if three government organizations have drawn the conclusion which is completely different, increasingly whether it is better to participate in TPP.

 

The Merit and Demerit of TPP

     There are many concrete merits and demerits which are acquired because Japan participates in TPP. For example, as a merit, the prices of meat or rice may become cheap by competition with overseas countries, or an exporter advances to overseas　become easily, and agricultural workers may move to industry because a farm population decreases sharply and the productivity of Japan may improve sharply. On the other hand as a demerit, there is a possibility that a domestic farmhouse may be pressed, deflation may progress because the prices of domestic goods fall rapidly by competition with an import, and the United States may put political pressure for TPP on entrance. In fact, called for sharp reduction of the customs duty of agricultural products, and reexamination of privatization of the postal service.

 

The conclusion of a TPP problem

     Thus, possibility of exerting a serious blow on a country, or big profits may be yielded by participating in TPP. An important thing is to perform the best judgment, after avoiding making a considering firmly conclusion without often arguing. Especially, in the present state, there are many disadvantageous demerits for Japan, we should consider carefully the argument of whether to participate, after asking for the improvement.