Hoping to cut down on tax evasion, a government advisory panel on economic and fiscal affairs will probably call for introduction of a taxpayer numbering system, panel sources said.

The Council on Economic and Fiscal Policy, headed by Prime Minister Junichiro Koizumi, is looking to include the recommendation in a paper on policy management to be put forward next month, the sources said Tuesday.

The numbering system would forestall tax evasion by keeping track of individual taxpayers’ income in a more accurate and efficient manner, they said.

Opponents say such a system would be an infringement on privacy.

In its attempt to rebuild the nation’s debt-plagued state finances, the council wants to review taxpayers’ social security benefits and their tax burdens, and is looking to a numbering system as a way of getting an accurate picture.

It will probably urge in its forthcoming policy paper that the system be adopted as a medium- to long-term goal, the sources said.

Earlier in the day, Heizo Takenaka, minister in charge of economic and fiscal matters, said it is imperative to create a system that will satisfy all taxpayers.

The Tax Commission, an advisory panel to the prime minister, said in a report in July that taxpayer numbering needs to be considered as a measure to achieve fair taxation.

Tax Commission Chairman Hiromitsu Ishi recently spoke of the need to discuss the pros and cons of the system so that proposed taxation on interest accruing from bank deposits can be put in place.

The Council on Economic and Fiscal Policy is scheduled to finalize a policy paper on economic and fiscal policy in late June after drawing up a draft at its meeting today.

The paper is expected to cover a wide range of policy matters, such as a review of public works spending, social security, the roles of the central and local governments, and the revitalization of the economy.

Local allocation tax

Toranosuke Katayama, public management minister, and Heizo Takenaka, minister in charge of economic and fiscal matters, agreed not to uniformly cut central government tax revenues allocated to local governments, but instead to cut central and local government expenditure, government officials said.

Katayama and Takenaka reached the agreement Tuesday during a meeting on reforming the local allocation tax system.

Reforming the system is one of the main focuses of a policy management paper the Council on Economic and Fiscal Policy — a government panel headed by Prime Minister Junichiro Koizumi — will put forward next month.

On the issue of reducing the total amount of local allocation tax, governors nationwide have voiced opposition, saying such a one-sided reduction is merely a means of shoring up the central government’s finances.

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