Consumption tax of Japan

11A3145017I

Reikou Kin

CIFJ October 30th ,2013

Contents

Consumption tax increase The tax system of Japan What’s consumption tax The reason why raising consumption

tax The affect of consumption tax

increase  DQ

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Consumption tax increase

October 1st , 2013, the Prime Minister Shinzo Abe decided to raise consumption tax from 5% to 8% from April 1, 2014. And it may be up to 10% from April, 2015.

Map

The tax system of Japan

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What’s consumption tax

Consumption tax: One of the indirect taxes, normal tax →different with the special consumption tax

Consumption tax 5%= consumption tax 4% + local consumption tax 1%

Consumers→ bear the consumption tax the corporation →make a declaration & pay

*special consumption tax

Only be taxed for the particular goods and services Ex. Tobacco tax, Gasoline tax, Liquor tax, Golf course utilization tax

Type:①the tax is included in the selling price → Ex. Tobacco tax, Gasoline tax, Liquor tax　 >>Double taxation 　　　　　 The selling Price = manufacturing cost + Specific tax 　　　　　　General Consumption Tax =the selling Price * tax rate (%) 　　　　　　　　　　　

② the tax is included in the price  → Ex. Bathing tax, Golf course utilization tax　 >> Specific consumption tax =the selling Price * tax rate (%)　 　　　　　　　　

*the process to pay consumption tax

*The way of using consumption tax

*History of consumption tax

*The tax rate and the tax revenue

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The reason why raising consumption tax

▪ "The part of tax increase will be the financial resources of the social security.”                   -Tamura Norihisa,

 Minister of Health, Labour and Welfare

▪ The tax revenue for the social security is too small.  -consumption tax ： ①stable and  don't be influenced by the economy       ②there are mutual checks in the deal and difficult to tax evasion　 ③ can protect people's privacy because it doesn't connect with the income      *If raise the corporation tax, the domestic employment will decrease.  *In Europe, consumption tax is the financial resource of the social security.

The affect of consumption tax increase 

▪  “ Japanese economy will not be impaired greatly by raising  the tax by 2-step.”                                                    - Kuroda,

the president of Bank of Japan

▪  By trial calculation of the Bank of Japan:

          The real economic growth rate ：

　　　　　　　 2013 -2.8%   　 0.3%↑　　　　　　 2014 -1.3%   　 0.7%↓ 　　　　　　　 2015 -1.5%     　 ↑

The merit:  ①the social service will be better.　 ② Everyone must to pay the tax, so there are little complaints    ③Can be a measure of tax evasion.    ④Because the consumption tax revenue is stable, good to make the social service better.

 The demerit: 　 ①Economy deteriorates.      ②The gap will be expand because of the increase of the tax burden to the low income people.     ③there are maybe adverse effects on small business.

DQ The results of poll & survey*poll:

*survey:  ①Do you think 8% consumption tax is high? (person) 　　　 Yes: 1 (33%)   No ： 2 (67%)

 ②How much of consumption tax is high do you

think ? （ like I think 20% tax is high)      1. 6%-7% (1)  2. 15% (1)      3.other opinion:  "...As long as the revenue is used well, and as

long as the gov't budget is transparent, raising it is okay..."  

DQ

 1. Do you think 8% consumption tax is high?

2. Which way do you want the government to use the tax most?

3. Can you think of some other ways to solve the problem of lacking of the funds for social security ?

*Reference Abe says Japan will raise sales tax in April as planned ,October 1, 2013, Mainichi Japan   

 http://mainichi.jp/english/english/newsselect/news/20131001p2g00m0dm038000c.html  (access at October 2nd, 2013) 

Ministry of Finance Japanhttp://www.nta.go.jp/shiraberu/ippanjoho/pamph/shohi/aramashi/pdf/002.pdf (access at Oct. 8, 2013)http://www.mof.go.jp/tax_policy/summary/condition/001.htm   (access Oct. 7, 2013) http://www.mof.go.jp/tax_policy/summary/consumption/122.htm  (access Oct.13, 2013)

http://www.mof.go.jp/tax_policy/summary/consumption/102.htm 　 (access at Oct. 25th, 2013)

　 http://www.mof.go.jp/english/budget/budget/fy2013/01.pdf   　 (Oct. 25th, 2013 access) "Consumption tax increase, without sacrificing economy,"  the president of Bank of

Japan, Kuroda emphasizes in a lecture ,July 29th,2013, MSN news http://sankei.jp.msn.com/economy/news/130729/fnc13072920590013-n1.htm  (access at Oct. 21th, 2013)

http://www.cmc.ne.jp/account/daily/backnumber/20101012.pdf  (access Oct.11, 2013) The trial calculation with the consumption tax increase by Bank of Japan, the  growth of

2014 will be push down 0.7%, July 31th,2013 　 http://sankei.jp.msn.com/economy/news/130731/fnc13073109490007-n1.htm(access at access at Oct. 21th, 2013)

the merit and the demerit of the consumption tax increase, Naverhttp://matome.naver.jp/odai/2131008920700185701(Oct. 21th, 2013 access)

Tamura,Consumption tax increase is “the necessary choose”,July 13th,2013, MSN newshttp://sankei.jp.msn.com/life/news/130730/trd13073021260015-n1.htm  (access at Oct. 21th, 2013)

"Why must raise the consumption tax", Kazuki Fujisawa, June 17th,2010,  　 http://agora-web.jp/archives/1035596.html 　 (access at Oct. 21th, 2013)

France is the first that introduced the normal consumption taxhttp://www.bunsan0020.info/ao5017/entry2.html 　 (access at Oct. 26th, 2013)