In light of the crushing public-debt burden and the rapid aging of the population, there is no question that Japan's tax system badly needs an overhaul. The government's Tax Commission, however, has failed to send a strong message that taxes will have to be raised. The impression is that it is unwilling, or perhaps even unable, to take a clear-cut stand on this crucial issue.
It is easy to think that the Tax Commission is sensitive to political concerns, given that the existing tax system was crafted on the initiative of political parties. Of course, politicians are almost always loath to propose tax increases. Nevertheless, by shunning hard-hitting recommendations, the panel does seem to have opted for the politically safe course.
Still, the report, which is the product of extensive discussions and was submitted to the prime minister last week, contains plenty of data and opinions that all point to the inevitability of a higher tax burden. The report pointed out, for example, that the individual tax burden in Japan, when measured as a ratio of national income, is lower than that in any other industrialized country and that spending cuts are far from being sufficient to eliminate the gigantic budget deficit.