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%.