Newspaper reports indicate that Japan's Tax Commission has used its role as an advisory panel to the prime minister to propose lowering the minimum taxable individual-income level. Raising taxes on the poor is justified by attempting to share the income-tax burden more widely. A wide range of allowable deductions has raised the minimum taxable level to a point that is high when compared to other industrialized countries.
The panel also recommends that the government review the "permanent" flat-rate cuts on income and resident taxes that were implemented in fiscal 1999 and raise consumption tax rates in the future. Proposals also include allowing local governments to implement a new corporate tax.
However, raising taxes during this period of slow growth might be the worst possible solution for restoring balance to the public treasury. It is hard to imagine a worse course of action than increasing taxes at a time when unemployment is high and economic growth is sluggish.