A bill to increase the consumption tax has finally been submitted to the Diet. Approval is by no means assured, owing partly to the fact that the substance of the issue has changed since the idea of a consumption tax was originally formulated. The Liberal Democratic Party saw it as a source of funding for social-welfare programs, but the Democratic Party of Japan — which, when the LDP was in power, objected to any increase — now sees its purpose as something different. Prime Minister Yoshihiko Noda has melodramatically declared that he is staking his political career on passage of the bill, a stance whose desperation probably has the opposite of its intended effect, which is to convince the public that it's really necessary.
An editorial in the April 1 Tokyo Shimbun questioned this tone of sacrifice, since most of the government's plans for reducing expenditures have been put off. During an NHK interview last week, Noda explained the steep drop in public support for the tax increase as a misunderstanding on the part of the average person that all the government wants to do is increase the consumption tax; but what else is this average person to think after the DPJ postponed the reduction of politicians' salaries and bureaucrats' benefits, as well as the unification of pension schemes? The tax is no longer promoted as a source of revenue for social welfare. It's simply a means of fending off insolvency. Of the proposed 5 percent raise, 4 percent will go to paying off the national debt.
Noda insists that a consumption tax is the fairest levy there is, an assertion Tokyo Shimbun challenges. Social welfare, if that's the original reason for the consumption tax, comes down to income redistribution, which means its source should be progressive taxes, such as those based on income or corporate profits. Consumption taxes are more appropriate for funding local government schemes, since residents can directly benefit from services they all pay for equally.