諮問・答申・報告書等

June 2002

The Tax Commission

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Introduction

    At the beginning of this 21st century, Japan is reaching a critical stage to make a comprehensive tax reform since the basic policy and framework of the present tax system greatly depend on the Shoup Taxation System introduced in 1950. Since then a half-century has passed, and the Japanese economic system, formed after World War II, has been undergoing great changes. In anticipation of a coming aging society, a number of comprehensive tax reforms have been introduced, including the introduction of consumption tax and the relaxation of progressive taxation of individual incomes. However, the present tax system is unable to deal appropriately with rapid changes of the Japanese socioeconomic structure, for example the falling birthrate, aging population, and globalization of economic activities. Thus, considering the transforming Japanese society, it is essential to institute a long-range tax reform that is applicable to the Japanese society over a couple of decades to come.
    Based on a request for deliberation made in September 2000 by then Prime Minister Mori, the Tax Commission set up a Sub-Committee on Basic Issues in July 2001 to discuss a medium- and long-term tax system. Since the request from Prime Minister Koizumi in January 2002, the commission started intensive deliberation on fundamental reform of the tax system of this country from mid- to longer-term viewpoints. The Tax Commission has been discussing the reform and, based also on the discussions at the tax town meetings held at six places in Japan, decided to publish the policy guidance on the establishment of a desirable tax system.
Specifically, Prime Minister Koizumi asked the Tax Commission to examine the existing tax system ''without prejudgment'' and ''without sanctuaries'' from the medium- and long-term viewpoints for structural reform. The prime minister also added that if the commission recommends a tax reform for a short-term economic vitalization, the reform must be consistent with the basic medium- and long-term policies for tax reform. His requests were completely in line with the directions for which the Tax Commission has been pursuing so far.
    The Tax Commission worked on the examination of the existing tax system from medium- and long-term viewpoints rather than a short-term viewpoint so that a reformed tax system could be instituted to function well in the first half of the 21st century in Japan. This draft depicts basic policies of a desirable tax system. The ongoing examinations will decide more concrete contents of taxes to be re-examined and the timing of reforms at a later stage.
    The contents of the reform will be broad and comprehensive because what is being proposed is a comprehensive reform of tax system that was instituted some 50 years ago. As a result of adjusting deficiencies in the existing structure, tax may increase in a number of areas. Needless to say, however, the Tax Commission has no intention to recommend that this tax reform be legislated immediately for FY2002 or FY2003. A tax reform must be introduced into society gradually and carefully. It is essential that the government carry out a thorough cut in expenditures and administrative reforms in enforcing a tax reform in order to gain trust and support from Japanese people. Such austere measures will include cuts in expenditures for social security, public works, and budgets for local governments. Visible and thorough cuts in expenditures seem inevitable in order to gain support from taxpayers. In addition, discussions must be continued to deepen discussion on a sustainable and efficient social security system. This report intends to outline, from the mid-to-longer term viewpoints, policies toward establishing a desirable tax system for Japan that has a large fiscal deficit amid the falling birthrate and aging society. . The Tax Commission welcomes broad and constructive discussions on reforming tax system toward a desirable tax system.