LONDON — Consumers everywhere are demanding deregulation. Most competitive businesses also want red tape and unnecessary regulation eliminated. Only the inefficient and uncompetitive, who believe that they are protected by rules restricting competition, are against the deregulation of their businesses.
Many European economies are suffering in much the same way as Japan from bureaucratic over-regulation, either by their own governments or by the European Commission. Generally, the main difference is that the rules in Europe are more transparent than those in Japan. But the complexity of the rules and their number are just as daunting to businesses. Accountants and lawyers are the only real beneficiaries of the regulation maze.
Labor regulations in Europe — limits on working hours, health and safety rules, requirements governing equal opportunities for men and women and the avoidance of racial discrimination, and provisions against unfair dismissal — are, in principle, all sensible requirements. Businesses, however, are forced to spend too much time and effort trying to keep up with changes and enforce existing rules.
These efforts inevitably raise prices and can damage small businesses, which have difficulty meeting the increased overhead costs of employment. The British government claims to be friendly toward business, but, despite some efforts to streamline systems, the burden of compliance grows all the time. Further efforts are needed to simplify the rules and codes of practice.
The most complicated sets of regulations in Britain are those governing taxation and national insurance. The annual finance acts to implement tax changes get longer and longer, and are only comprehensible to lawyers and accountants. Chancellors of the Exchequer and the Treasury officials who support them generally justify proposed changes on the grounds of fairness or because the beneficiaries are considered to be in need of some encouragement and are an important element in the economy that would otherwise lose out to foreign competition.
But absolute fairness is, in my opinion, unachievable, and the areas of business justifying special measures and exemptions are not objectively verifiable. The priority should, in future, be placed on simplicity.
The British income-tax system has become ever more complicated, and the completion of Inland Revenue tax forms under the newly introduced self-assessment system has become a nightmare for most taxpayers with various sources of income. Chancellors of the Exchequer are constantly tinkering with the system of allowances to be set against tax and altering rates and bands. If an allowance is withdrawn or modified, there are inevitable howls of protest from those who lose out in the process. So, in order to moderate the outcry, exceptions are made that complicate the system still further.
The complications are legion, and a reforming chancellor in a strong position — like Gordon Brown in Britain — should be able to brush off criticism, emphasizing that in the end simplicity is the best guarantee of fairness. Unfortunately, in his latest budget, presented to Parliament March 21, Brown confirmed his reputation for tinkering with and complicating the system.
The Inland Revenue has been trying with only limited success to simplify its forms and to explain in straightforward terms the information the taxpayer is expected to provide, but some forms remain gobbledygook. Inland Revenue officials are supposed to show a helpful attitude toward taxpayers who are mystified by the complexity of the rules, but sometimes they seem to take advantage of the “stupidity” of the taxpayer and numerous mistakes by the Inland Revenue have been reported.
The situation in Britain is, however, almost certainly not worse than in other European Union states or in the United States. Most foreigners in Japan find the Japanese system equally impenetrable and leave the completion of their tax returns to experts, realizing that their main task is to pay up.
The drive for deregulation in Japan seems to have run into the buffers as a result of the customary determination of the Liberal Democratic Party to do nothing that might offend their stalwart supporters — even if, as is apparent, deregulation would be in the public’s interest. It is probably vain to expect much, if any, further movement on deregulation in Japan before the next general election. But the government could surely try to simplify and clarify the rules that they are maintaining and defending.
In the British Civil Service, it used to be a requirement that officers should write in what was called “plain English.” Sentences should be short and uncomplicated. We did not always succeed. When a memorandum has to be written in a hurry, sentences and paragraphs become longer and more complicated. It is sadly true that it is more difficult to write one clear page than three pages where the points have not been thought through properly.
Foreigners have been told that Japanese is a vague and illogical language. It can be, but so can most other languages, including English. Japanese need not be vague or complicated. Unfortunately, however, Japanese civil servants, who have so often studied law at university, tend to believe that certainty depends on the use of the right legal phraseology. This often leads to rules being drawn up that are incomprehensible to the layman.
Moreover, Japanese officials often have to spend too much time drafting speeches for ministers who generally don’t wish to say anything clearly and succinctly. This means that many have lost the ability to write “plain Japanese.”
I was not surprised by a recent report that Ministry of Finance officials had reacted with scorn to an offer from Keidanren to help with the redrafting of financial regulations in order to speed up the processes and presumably ensure that the new rules are understandable and effective.
The officials apparently declared that they could not deal with the issues involved for some time as they were “too busy” with other pressing matters. They also indicated that they could not accept help as the task of redrafting was “their prerogative.”
The opposition should have probed this report and, if it was found to be true, condemned the arrogance of the Ministry officials concerned.
I hope that Japanese politicians and civil servants will dedicate themselves not only to further deregulation but also to a major simplification and clarification of the rules governing businesses and taxation.
In Europe, we, too, must insist on simplicity and clarity.
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