Japanese Trade Union Confederation (RENGO)

President Takagi’s Appeal to the Tax Commission

Seek Tax Reform from a Workers’ Viewpoint

At the Tax Commission’s Main Committee which convened on July 11th, RENGO President Takagi, who is also a member of the government's Tax Commission, gave his opinion on future tax reform based on the workers point of view. Given the real conditions surrounding disparities and employment, he strongly urged the government to carry out fair taxation by correcting income and asset disparities which included raising the maximum income tax rate, revising the preferential tax system for income gained from financial transactions, and so forth.
The Tax Commission is currently studying tax reform modality for the next several years and expects to compile a “Mid-Term Report” in September at the earliest. Takagi’s remarks came as a result of Commission Chair Ishi’s intention to hear from both labor and economic circles in the discussions leading up to the committee’s “Mid-Term Report.”

Outline of President (and Commission member) Takagi’s remarks

• We must create a society where people respect the significance and value of labor. A society that guarantees a standard of living, jobs, child-rearing, and reassurance in one's old age. Tax reform must also be undertaken from this standpoint.
• While many say that employment is recovering, in fact what is increasing is atypical labor, which leads to a bipolarization of income.
• Another major reason for widening disparities is the weakening ability of taxation to redistribute income. There is still unfairness in taxation. When reforming the tax system in the future, what is “fair” will become a particularly important view and we should “not lament poverty, but rather inequality.”
• Although only consumption tax is being debated as a funding resource for social security, what we really need is an overhaul of the whole tax system and especially how revenues from taxes and insurance are distributed.
• The maximum income tax rate should be rolled back to pre-permanent income tax reduction levels. Moreover, there should be a review of tax incentives for income gained from financial transactions to introduce graduated taxation and our mid-range goal should be taxation on ones aggregate income.
• Debates over estimated expenses have taken precedence in the discussions on wage income deductions and the capacity of the taxpayers is being neglected. Job destabilization is weakening workers' capacity to bear taxes and we must never allow deduction cuts in such climate.   
• When revising a range of deductions and in light of an international lowering of minimum taxable levels, priority should be given those revisions which enhance fairness and neutrality and not just those that abolish or downsize. Low income earners will not be affected from income deductions for child-rearing support. Upgrading the child-care allowance is the measure to take. Also, there should be neutral taxation for a married couple's choice of work.
• The government should recognize a system in which wage earners choose a self-assessment tax and year-end adjustment. A taxpayer identification number system should be introduced soon.
• With regard to the consumption tax, the government should promptly introduce an invoice system and turn around regressive taxation by resolving problems of profit from underpayment of taxes and introducing multiple tax rates. Regarding the relation of consumption tax to social security, discussions should be held on taxes earmarked for pensions.
• Inheritance taxation should be enhanced by reviewing the tax rate structure in such ways as raising the maximum rate while at the same time studying business succession issues.
• The corporate income tax rate should not be lowered any further. The taxation of new nonprofit (-making) enterprises should be studied from the standpoint of promoting public-interest activities. The taxing of charitable contributions also should be upgraded.