Fiscal reform is paramount, JR West chief says

OSAKA — Prime Minister Ryutaro Hashimoto’s government must concentrate on implementing fiscal reform above all other proposed streamlining initiatives, the chairman of West Japan Railway Co. said in a recent interview.

“I welcome the government’s move to achieve all of its planned reforms, but it should first tackle fiscal reform,” said JR West Chairman Masataka Ide, who stepped down from the presidency and became chairman last month after nine years as an executive of JR West. “But in order to successfully achieve fiscal reform, the government will also have to implement administrative reform,” he said. “Thus, realizing fiscal reform means accelerating the speed of the other five reforms.”

The government has no time to hesitate and must come up with measures to resolve its accumulated 250 trillion yen debt as soon as possible, Ide said. Combined long-term debts of the central and local governments are predicted to hit 476 trillion yen by the end of next March. “When faced with such a huge amount of debt, there should be no sanctuary in the government’s budget,” he said, explaining that the government should review sources of revenue and expenditures thoroughly to solve the debt problem.

Ide proposed that the government review and utilize its special accounts that have distinct sources of revenue such as special taxes. Gasoline taxes, for example, should go to a special account for road and highway construction. “A special account for building roads and highways can be a huge financial source to resolve the government’s debt problem,” Ide said.

Commenting on the JNR debts, Ide said the issue should also be dealt with as part of the government’s fiscal problem. He rebuffed the state’s attempt to make JR group firms accept additional burdens by proposing ideas such as creating a new railway tax.

If the government imposes a 2 percent tax on the sales revenue of three JR carriers — JR West, East Japan Railway Co. and Central Japan Railway Co. (JR Tokai) — for example, annual tax receipts will only be 80 billion yen, or less than 10 percent of the required interest payment, Ide said.

The combined annual revenues of the three railways is roughly 4 trillion yen.

In addition, it can easily be assumed that the introduction of such a tax would reduce JR passengers at least by 2 percent, cutting into their revenues, he said. The result would be a drop in the carriers’ share prices and corporate tax revenues. “The government should really consider what will truly benefit it,” he said.

Ide also wants the government to work harder on deregulation, noting it should have more trust in private companies. Ide claimed that JR group firms, for example, now have to deal with more regulations than before the JNR privatization. “The government was very flexible with the former JNR in many ways, but this shifted drastically as soon as we became private corporations,” he said.

He said the government’s job should be eventually reduced to give incentives to private companies. For example, he said the government and bureaucrats should only work on areas such as the budget, social welfare, diplomatic affairs and defense. “Their job is not imposing restrictions on private companies but to provide incentives for businesspeople,” he said.