[talk] What's Happening in the Discussion on Taxation Reform?

Economic bureaucrats A,B,C,D

Four of the bureaucrats who are currently in charge of the practical business of taxation reform in the administrative district of Kasumigaseki participated in this discussion, which was held by Genron NPO on the condition of anonymity. The discussion started with a consideration of the possibility of the fundamental taxation reform under the current economic conditions. Although three of the participants agreed that it was necessary to reform the current taxation, an official from the Ministry of Finance insisted that, judging from the principle that the main purpose of taxation is to obtain funds for spending, one must discuss such matters by strictly focusing on maintaining the fiscal balance. Participants from other ministries opposed this opinion from their respective positions, stating that spending reduction by using the tax as a leverage is the only way to regain the power of policy to cope with the current situation, and under the current state of decline in Japan's competitiveness, one must encourage the creation of new markets by utilizing the tax. The Ministry of Finance is cautious because the current taxation generated politically overoptimistic policies, which led to the shortage in tax revenues. Cabinet Office officials contradicted this opinion, stating that the public will never agree with a tax increase while spending remains intact. Because taxation is a subsystem of the economy, it must be considered in the whole framework of government finances. Thus, the discussion on this issue followed parallel courses without reaching an agreement. The Council on Economic and Fiscal Policy is currently putting forth the reform, presenting the quality of tax as its central issue, and planning to prepare the progress schedule of taxation reform to recover the fiscal balance in a middle- and long-term basis. However, there was criticism against this that it is the same old trick of only dangling the carrot (and keeping the stick hidden). As for the method of working for tap exaction reform, which is another focal point, there has been reported discord among the Council on Economic and Fiscal Policy, the Tax Research Commission and the Tax Commissions of the parties. In this regard, the opinion was divided between those who attribute the reason of conflict to the vagueness of the separation of roles, and those who put weight on the importance of discussing the matter among several parties rather than its separation of role at the current stage. Since the launch of the Koizumi Cabinet, policy formulation has been shifting towards the Cabinet-led style. Although it is expected that this trend will end with tax policies, there was also an opinion that the confusion in the policy formulation process is Because the Prime Minister's Official Residence does not order the idea or policy of taxation reform specifically and in detail. Thus, the problem of whether the strategy for the taxation system can be realized not only in the short-term stimulation of the economy but also in the middle- and long-term reform of Japan remained uncertain for each of the participants.