Dogbert: From your Tokyo perch, can you offer any insights as
to why, in the midst of a veritable depression, the Japanese
illuminati moved to raise taxes on an already overburdened
populace?
Good question. The tax raised was the "consumption tax" which is like our state sales taxes, but national. It applies to everything "consumed": meals, hotel rooms, cars, clothes, services, basically everything. I think it also applies to goods bought by businesses and used up in manufacture of other goods. But I don't think it applies to something a business buys just to resell because the business hasn't "consumed" that item. The tax is now 5.5% (just checked my breakfast receipt) and I think it had been 3% for years (I come here around 6-10x a year) before it was raised this year.
Seems kind of dumb to raise a consumption tax when you need to stimulate demand, I agree. Here are a few thoughts:
1. The government here is basically a socialist bureaucracy. There are lots of underutilized people in government jobs everywhere, and they have lifetime employment. None of them is interested in efficiency, their 'mission statement' is to keep their jobs and slowly "earn" their promotions which are 90% based on senority and 10% on merit. (The private sector has tons of dead wood too, and it works similarly, but that's another story.)
2. In a recession/depression, especially with deflation, the total value of things consumed goes down, and so does the consumption tax revenue unless you raise the tax percentage.
3. I would guess that deficit spending is anathema to this government. I don't have the facts and maybe someone will tell me I'm out to lunch, but my theory is they raised the tax percentage to keep tax revenue intact and prevent the bureaucracy from running "into the red".
4. Japanese people are like sheep. They do what their government tells them, and don't complain much. A famous Japanese parable is "the nail that sticks out gets hammered." Everyone must conform to what's expected of them, by society, by government, by family, by an employer, etc., and bear their burdens quietly. It is really tough to be Japanese (honestly). So my guess is no one raised hell about the tax increase, though they may have grumbled a lot.
That's about it on taxes. I see someone asked another question so I'll try to answer it in a separate post. |
