OSAKA — The Osaka Prefectural Assembly approved a controversial bill Tuesday to impose a 3 percent tax on the gross profits of major banks operating in the prefecture.
Modeled on a bill adopted by the Tokyo Metropolitan Assembly in March, the new plan calls for a five-year tax of up to 3 percent on banks with 5 trillion yen or more in deposits.
As in Tokyo’s case, about 30 banks will be affected by the measure, which would take effect next April.
The bill, which was proposed by the Osaka chapter of the Liberal Democratic Party, was passed by a majority vote of the LDP, the Japanese Communist Party and the Social Democratic Party. The three parties have 56 seats in the 112-seat assembly, excluding the assembly chairman from the LDP.
Last Thursday, the bill was approved by the General Affairs Committee of the assembly with the endorsement of the committee chairman, Nariaki Hata of the LDP, after the initial vote ended in a tie.
Local chapters of New Komeito and the Democratic Party of Japan that voted against the measure at the committee session said they want the bill carried over to the next assembly session in September.
The prefectural government estimates the new levy will increase Osaka’s annual tax revenues by 37 billion yen. However, because the prefecture, which is experiencing a severe financial crisis with prefectural bonds already issued standing at about 4 trillion yen, receives tax grants from the central government, about 80 percent of the revenue increase would be offset by a decline in state tax revenues, leaving a net increase of only 7.5 billion yen annually.
In the case of Tokyo, which receives no grants from the central government, the same tax plan is expected to add an average of 110 billion yen to metropolitan coffers.
Also unlike Tokyo, where the new levy was put forward by Gov. Shintaro Ishihara, Osaka’s bill was put forward by members of the LDP — the largest force in the assembly with 43 seats.
Osaka Gov. Fusae Ota initially said she is opposed to the new tax and has set up a working team to examine tax reform measures instead.
But after the bill was adopted by the assembly Tuesday, Ota said she would not veto it, saying she would respect the decision by the assembly that represents voters in the prefecture. The governor could theoretically veto it with authority based on Article 176 of the Local Autonomy Law. If vetoed, it could only be overruled with the support of more than two-thirds of the assembly.
“I respect the assembly’s conclusion, and based on it, (the prefectural government) will take appropriate measures,” said Ota, who had earlier asked the assembly members to “consider the bill cautiously.”
The tax plan was initially submitted on the final day of the March session of the prefectural assembly. The committee held three sessions before putting it to a vote last Thursday.
Meanwhile, Home Affairs Minister Kosuke Hori said Tuesday morning that Osaka Prefecture’s plan to introduce a new tax on major banks should spur discussions on the possible introduction of a similar tax at the national level.
Hori said that action could also lead to the uniform introduction of such a tax in other prefectures.
He also said he is “concerned” that the proposed new tax could damage the economy.
But he said he “rates highly the fact that a local government is making an effort to expand its sources of revenue.”