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Tax: What It Really Should Be

Shinya Tateiwa November 29, 2008
Asahi Shimbun@2008-11-29 Morning EditionEKyoto:31

People say that Japan's government has no money. At the same time it is often said that what needs to be done before increasing the taxes is to reduce waste. It is very true that we need to eliminate unjust use of money. But if we take a level-headed look at what can actually be achieved by such elimination, we will have to admit that the amounts we would be able to save would be quite negligible. Now, I personally believe that many of governmentfs items of expenditure can be either scraped altogether or at least much reduced, but here opinions will divide. And, as everyone knows, in the course of such reduction, the government is already making cuts in the areas, which should not be touched - in the areas of social security and medical services.

This is where there seems to be no choice but to increase the consumption tax. In the case of income tax, in reality there are always taxes that should be but are not levied, but with consumption tax, it is paid automatically every time someone pays for something, which makes it advantageous indeed. And I do not necessarily oppose this way of thinking.

But I feel that before increasing the consumption tax, there is one thing that can and should be done. And that is straightening up the system of progressive taxation, that is, of the mechanism requiring people with more money to pay more taxes. Although many people have already forgotten about it, and quite a lot of people have never even heard about it, some time ago Japan has slackened the progressiveness of tax and has left it at that. For the time being, there is quite a lot to be gained by just restoring the taxation to what it used to some time ago. And I believe that we should do it.

But every time I voice this opinion, I unfailingly have to deal with several objections. One is that such a step will result in a decrease of people's work incentive, which is not good. There is surely some truth in this assertion. But, again, when we take a level-headed look at it, we cannot but feel skeptical about it.

Everyone knows that among people there is a very large difference in income from work. The difference is enormous, but does it really motivate people one way or the other?

Probably, there are many people who would accept the statement that this difference should correspond to the difficulty of labor. However, these very people often think that they are also working quite hard, but the difference does not correspond to the hardships they are going through. Moreover, these people know that although among those receiving plenty there are those who made a great effort to acquire some special abilities, which enable them to engage in difficult labor, at the same time, there are plenty of those who did not. But they still work and continue working - simply because they have to.

This is the reality. In the market, the difference exists and persists. Adjusting it is the duty of the government. And the government has to do its duty. I do not feel that measures made in this direction would make the high-income earners lose their motivation to work and quit working. Life of those, who work hard but barely make ends meet, will get better. And I would not think that they will lose any motivation to work either.

Social Policy@ Shin'ya Tateiwa@ ^
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