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employer and employees, and the fees cover 60% of the costs; accordingly, the
remaining 40% represents a deficit. The national government can cover 30% that
40%, while local governments can cover the 10%. The burden of the national government is approximately 30 trillion yen, and that can be appropriated from the
general account budget.
Government expenditures for public works, education/science and technology,
ODA (government provided overseas development aid), defense, etc., are fundamentally at a zero growth rate. The public policy expenditure that will grow on its
own is that related to social security. Under normal circumstances, the government
spending on social security is increasing at about 60–70 billion yen per year.
Accordingly, social security expenditures are the cause of expansion in the
government budget deficit. That is not the case only in Japan, but in the United
States and Europe as well. The situation in Japan is the most extreme, though.
So, what can we do? Simply put, Japanese people have to pay a bit more taxes.
Taxation can become long topic of conversation, so to be brief, consumption tax
does not have a progressive structure like income tax, but it is a proportional tax, so
is not a bad idea. It may be necessary to provide some allowance to low-income
people due to a regressive effect, but consumption tax is the answer.
In Europe, EU policy stipulates a minimum taxation rate, which for consumption
tax is 15%. However, there are almost no countries in the EU with the minimum
consumption tax rate of 15%: in England, France, and Germany, the rate is approximately 20%; and in Sweden and Norway, it is approximately 25%. There is no way
any country in the EU could have a consumption tax rate of 5%, which was the rate
in Japan until a short while ago. Accordingly, there was impetus to do something
regarding the consumption tax, which should have been raised to 10% but was raised
to 8% and has remained there, with calls to put off raising it further into the future.
Komiyama Yes, I certainly understand that it is necessary to finance social security through indirect taxation. Meanwhile, I believe that it is also a fact that the
economy is not growing because there is not enough innovation happening. By
Interview
employer and employees, and the fees cover 60% of the costs; accordingly, the
remaining 40% represents a deficit. The national government can cover 30% that
40%, while local governments can cover the 10%. The burden of the national government is approximately 30 trillion yen, and that can be appropriated from the
general account budget.
Government expenditures for public works, education/science and technology,
ODA (government provided overseas development aid), defense, etc., are fundamentally at a zero growth rate. The public policy expenditure that will grow on its
own is that related to social security. Under normal circumstances, the government
spending on social security is increasing at about 60–70 billion yen per year.
Accordingly, social security expenditures are the cause of expansion in the
government budget deficit. That is not the case only in Japan, but in the United
States and Europe as well. The situation in Japan is the most extreme, though.
So, what can we do? Simply put, Japanese people have to pay a bit more taxes.
Taxation can become long topic of conversation, so to be brief, consumption tax
does not have a progressive structure like income tax, but it is a proportional tax, so
is not a bad idea. It may be necessary to provide some allowance to low-income
people due to a regressive effect, but consumption tax is the answer.
In Europe, EU policy stipulates a minimum taxation rate, which for consumption
tax is 15%. However, there are almost no countries in the EU with the minimum
consumption tax rate of 15%: in England, France, and Germany, the rate is approximately 20%; and in Sweden and Norway, it is approximately 25%. There is no way
any country in the EU could have a consumption tax rate of 5%, which was the rate
in Japan until a short while ago. Accordingly, there was impetus to do something
regarding the consumption tax, which should have been raised to 10% but was raised
to 8% and has remained there, with calls to put off raising it further into the future.
Komiyama Yes, I certainly understand that it is necessary to finance social security through indirect taxation. Meanwhile, I believe that it is also a fact that the
economy is not growing because there is not enough innovation happening. By
Interview