Business groups criticize coupons, urge tax cuts

by Reiji Yoshida

Staff writer

Will the proposed merchandise coupons help pull Japan out of economic crisis by boosting consumption?

Many business leaders say no, and some even brush aside the 700 billion yen project as mere nonsense.

Three of the most powerful business organizations in the nation have expressed strong doubts about the effectiveness of the scheme agreed upon by the Liberal Democratic Party and New Komeito, and instead are calling for quick direct tax cuts.

The three groups are the Japan Federation of Employers’ Associations (Nikkeiren), the Japan Association of Corporate Executives (Keizai Doyukai) and the Japan Chamber of Commerce and Industry.

Kosaku Inaba, chairman of the chamber of commerce, immediately released a response after the two parties agreed on the coupon plan Tuesday. “The current dwindling consumption is based on (consumer) anxiety over an unclear future, and as a measure to remove these worries, the coupon has limited value,” said Inaba, who heads the nationwide association of small and midsize businesses. “Sure enough, full-fledged tax cuts such as income tax reductions are essential,” Inaba said in the statement.

Inaba’s comment is backed by a recent poll taken by the Tokyo Chamber of Commerce and Industry, which shows most small businesses doubt the coupons will be effective.

Of the 380 chamber members who responded, 35.3 percent said they expect the coupons to offer little help and 16.9 percent said they “don’t expect much” from them.

The idea of issuing coupons with expiration dates originally was put forward by the two parties out of fear that the public would use much of the revenues from a tax cut simply to increase their savings, instead of to boost national consumption.

But critics argue that vouchers would make little difference. They argue that consumers would use vouchers to obtain things they would buy anyway, and the coupons simply would allow them to increase their savings.

They say that issuing coupons will involve a complicated, costly process to confirm legitimate recipients and prevent counterfeiting. Critics say this would increase burdens on local governments and even on consumers — who, as taxpayers, ultimately would shoulder all the costs of issuing coupons.

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