The Tax Commission, an advisory body that directly reports to the prime minister, has decided to put off for a year or so recommendations on middle-range tax reforms. Short of official recommendations, however, commission chief Hiromitsu Ishi has issued a personal statement calling for public discussions to consider the consumption tax as a revenue source for funding social security entitlements. Still, he has not touched on specifics such as whether the consumption tax should be raised and when such a raise, if needed, should take effect.
Since the commission’s current three-year term ends Oct. 5, it is set to end its term without issuing any such recommendations. This is the first time since its inception in 1962 that the commission will end its term without completing its primary task.
It is clear that the commission avoided tax-reform recommendations because it was too conscious of the nation’s political calendar this month — the election of a new ruling Liberal Democratic Party leader Wednesday followed by the Diet’s selection of a new prime minister. An Upper House election is scheduled in the summer of 2007.
Political discussions are heating up concerning a possible raise in the consumption tax and the idea of using consumption tax revenue for social security purposes. The commission apparently thought that if it officially recommended raising the consumption tax to boost the nation’s financial rehabilitation, it might affect the Upper House election results, possibly to the disadvantage of the ruling party.
But the commission’s task is to objectively analyze the situation with the nation’s coffers with regard to society’s needs, make what it believes are the best recommendations for addressing them and propose concrete tax measures. The recommendations, as an advisory report to the prime minister, should provide a concrete picture of future tax requirements and serve as a basis for public debate on taxes. The commission’s omission this time has tarnished the reason for its existence as well as its image of neutrality and independence.
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