A basic agreement reached earlier this month by the three ruling parties on fiscal 2001 tax code changes is a case of being unable to see the forest for the trees. Their myopia distorts an overall tax review and undermines the basic principles of taxation: fairness, neutrality and simplicity.
The agreement, put together by the Liberal Democratic Party, New Komeito and the New Conservative Party, lacks a long-term outlook for a 21st-century tax system. With an Upper House election scheduled for next summer, it focuses on politically palatable measures, such as expanding family gifts that are nontaxable and extending tax breaks for home loans.
The tax system needs an overhaul to reduce the heavy public-debt burden, the nation's most formidable fiscal problem. Yet the tripartite tax talks apparently breezed along as if the problem never existed. There was, by all indications, no sense of crisis, no strong determination to rewrite the tax code. It was deja vu all over again -- the ruling parties tinkering with the tax system to suit the needs of their administration.