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Let's discuss the consumption tax

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Just as Japan braced itself for a hike in the sales tax to 10 percent on Oct. 1, one of

Prime Minister Shinzo Abe’s would-be rivals called for it to be abolished altogether.

Taro Yamamoto, a former actor who is now the leader of an upstart party that won two seats in July’s Upper House election, says the increase from the current 8 percent will put a chill on consumption, despite the government’s efforts to alleviate such concerns.

“It’s not normal to raise it to 10 percent,” Yamamoto, the leader of Reiwa Shinsengumi, said in an interview in Tokyo. “I can only call it crazy.” The psychological effect of hiking the tax to an easily calculated round number will be to prompt consumers to “put the brakes on,” he said.

Meant to help rein in the ballooning debt triggered by social security costs associated with the graying population, Japan’s previous sales tax increases have damaged the economy and hurt political careers, prompting Abe to twice delay the increase to 10 percent.

The government says this time is different, after it introduced a raft of measures meant to smooth out any rush demand ahead of the increase and return much of the initial revenue to taxpayers.

Reiwa Shinsengumi is a minnow even among Japan’s splintered opposition. Yamamoto, who starred in the brutal 2000 film “Battle Royale” — about a group of teenagers forced to fight to the death — says he’d be prepared to work with other opposition parties to try to roll back the sales tax first to 5 percent and then to zero. The tax hike divides the public, with 41 percent of respondents to a poll published by the Mainichi newspaper last week saying they agreed with it, while 50 percent said they did not.

In broader terms, the Abe administration has succeeded with its monetary policy but has failed to spend enough money to achieve its goal of defeating deflation, Yamamoto said. That could be funded by issuing more bonds, if necessary, he added.

“Japan is suffering from a serious disease, so you need a proper prescription to treat it,” Yamamoto said. Concerns about fiscal collapse that have simmered for the past 30 years have proved to be unfounded, while interest rates have slumped over that period, he said. Controlling the excessive inflation should be the only limit on government spending, he added.

While Yamamoto’s ideas are reminiscent of Modern Monetary Theory, something the Abe administration has consistently rejected, Yamamoto said he sees his ideas as basic macroeconomics.

First published in The Japan Times on Sept. 22.

Warm up

One minute chat about what you like to spend your money on

Game

Collect words related to taxes, e.g: money, pension, pay, government

New words

1) rein: a restraining influence, e.g. “We have to rein in our spending and save money.”

2) raft: a large collection, e.g. “There is a raft of knowledge at the university library.”

3) prescription: rules or instructions that have been handed down, e.g. “The doctor gave me a prescription for medicine that I should take twice a day.”

4) reminiscent: something that recalls another thing from the past, e.g. “Her dress is reminiscent of a style from the 1970s.”

Guess the headline

Abe rival Taro Yamamoto says Japan’s s_ _ _ _ tax hike is ‘crazy’ and should be a_ _ _ _ _ _ed.

Questions

1) How is the tax system changing?

2) According to the article, what is the reason for the tax hike?

3) How has the public reacted to the hike?

Let’s discuss the article

1) What do you think about the tax hike?

2) Will it affect the way you spend?

3) What do you think is needed to help with social security costs?

Reference

5%から8%に増税となったことも今や昔、ついに消費税が二桁の10%へと引き上げられることになりました。当然ながら日々の消費に対して支払わなくてはいけない金額が増え、それ自体は消費者である私たちにとって嬉しいことではありませんが、一方で日本の財政を維持するためには必要不可欠な措置だという見方もできるでしょう。増税のたびに巻き起こる議論は、少子高齢化など多くの課題を抱える日本においていまだに正解がわからないまま、時を追うごとに消費税が上がっていくという状況です。支払うべき消費税と、それによって社会を支える日本の財政に私たちは何を望めばいいのか、朝英語の会に参加し皆さんで話し合ってみましょう。

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