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LDP eyes cellphone, pachinko prize taxes

JIJI

Some members of the ruling Liberal Democratic Party are considering seeking taxes on mobile phone owners and the pachinko industry to cover a chronic shortage of government revenue.

With the balance of government debts at a record ¥1.04 quadrillion at the end of June, the new taxes would be aimed at helping the government’s fiscal reconstruction, sources said.

At an LDP panel launched in June to discuss mobile phone issues, Lower House lawmaker Yasuhide Nakayama and others called for a tax on mobile phone owners, arguing that they are using limited radio wave frequency bands.

With some 140 million mobile phones in use in Japan, a monthly tax of ¥100 per unit would generate an estimated ¥168 billion annually in revenue.

For the pachinko industry, which has annual sales of some ¥20 trillion, a 1 percent tax would push up the government’s tax revenue by some ¥200 billion a year.

The LDP lawmakers’ plan calls for imposing a tax on exchanges of pachinko prizes for cash. Winning players receive prices, which they usually trade in for cash.

Ahead of planned cuts in the effective corporate tax rate starting in fiscal 2015, the LDP’s Research Commission on the Tax System hopes to secure alternative tax revenue sources, observers say.

But there are high hurdles for introducing the new taxes as they would increase burdens on individuals.

“It makes no sense to pass on burdens from corporate tax cuts to individuals,” a top official at a major mobile phone carrier said.

Apart from generating money for the government, mobile phone taxes are seen as a way of reducing the heavy dependence on smartphones of junior high and high school students, LDP sources said.

It would be difficult, however, to sell to the public a new tax on a specific product.

As for a pachinko tax, the government needs to legalize direct exchanges of pachinko prizes for cash, which are currently prohibited by law.

With an additional consumption tax increase to 10 percent already planned in October 2015, some LDP lawmakers are concerned what effect that talking about new taxes would have on elections scheduled for next spring.

“It is difficult to introduce new taxes unless the public strongly supports them,” a senior Finance Ministry official said.