諮問・答申・報告書等

Part V. Others

1) Liquor Tax and Tobacco Tax
    Like many other countries, Japan has been taxing liquors and tobaccos as special articles of taste at tax rates higher than on other goods. Thus, liquor tax and tobacco tax have played an important role in the Japanese tax system. When taking the severe financial conditions of the government into consideration, appropriate tax burden levels should be continued in the future by considering their production and consumption levels of liquor and tobacco.
(1) Liquor Tax
    From the standpoints of ensuring the neutral and fair position in tax system, the present classification of liquors (10 types) should be simplified to narrow gaps of tax burdens among different types of liquors. In particular, liquors in the classifications that are inconsistent with the basic principle of the ''same burden on the same type of liquors'' should be re-classified in order to balance burdens among liquors.
(2) Tobacco Tax
    The US and many other European nations have raised tobacco tax in recent years.
    By considering the rate of tax to the retail price of tobacco, consumer trends, trends in other nations and fiscal conditions of the government, raising the tax rate of tobacco should be examined.
2) Earmarked Revenues and Energy-Related Taxes
    Gasoline excise and oil tax are earmarked for certain purposes. Earmarked revenues are used when the benefit and burden of specific public service are closely related and when the financial source of the service must be ensured. Although earmarked revenues are useful in ensuring the source of finance systematically, the mechanism could lead to an inappropriate distribution of financial resources, contributing to a congealed budget structure. Thus, the mechanism of applying earmarked revenues must be constantly examined.
    The basic mechanism of the earmarked road revenues, including their expenditures, should be examined by considering the original purpose and historical background of the system. Specifically, it should be examined whether such earmarked revenues should need to be maintained for road construction and whether the earmarked revenues have not contributed to the congealed budget system. The Tax Commission is of the opinion that the earmarked road revenues should be reexamined for revision, including re-classification into general account revenues, although some of the members of the committee are of the opinion that the revenues should be maintained as they are.
    Concerning Japan's energy-related taxes including the earmarked road revenues, the entire tax burden on automobiles is not so high in Japan seeing from international levels. Thus, lowering tax burden on automobiles is inappropriate considering social costs of automobiles and for environmental preservation. It is also pointed out that the present automobile-related tax items are too many and complicated. Discussions should be continued on an appropriate tax system relating to automobiles.
3) Response to Environmental Issues
    The Guidelines for Promoting Measures against Global Warming was reviewed in March 2002 for the purpose of attaining Japan's goals set forth in the Kyoto Protocol. This broad outline also states that ''continuous and comprehensive examinations should be made on tax, charge, and other economic methods by comparing with other methods.'' It is advisable that the government should work on environmental issues based on people's understanding and support because the issues will eventually ask people to bear financial burdens in the form of tax. In this case, the tax system should have concrete positioning in environmental policies of the national and local governments based on the Polluter-Pays Principle (PPP). In addition, relations with existing energy related taxes should be examined for revision.
4) International Taxation
    Along with the development of globalization, and computerization, tracing diverse corporate activities becomes increasingly difficult. An increasing number of corporations have been trying to reduce taxable income with intention in the form of arbitrage transactions where international differences of tax systems and their gaps are used. In international taxation, outflow of income from the nation virtually means to lose the taxation right. Therefore, the taxation system relating to activities beyond the national boundary should be revised in order to ensure Japan's taxation right on cross-border activities. In addition, enforcing appropriate international taxation must be carried out from the standpoint of keeping the fair and neutral position to domestic and cross-border economic activities.
    More specifically, in response to diverse formations of overseas-affiliated corporations in Japan, taxation at diverse business entities and Japanese branches of foreign corporations should be examined for revision. Meanwhile, in anticipation of activities of Japanese corporations beyond the national border, examinations should be continued on consolidation of foreign subsidiaries and rationalization of the foreign tax credit system. In addition, from the standpoint of ensuring appropriate tax enforcement that meets globalization, it is important to improve access to overseas information sources through exchanges of information with competent tax authorities of foreign governments based on tax treaties and other treaties with those governments. For a precondition of such access, legal systems concerned should be introduced so that the competent authorities of the Japanese government can provide information requested by a foreign government with which Japan has concluded a tax treaty (see appendix).
    Electronic commerce is global by nature and thus its problems cannot be dealt with unilaterally. Through discussions at OECD, an internationally concerted action in this area should be examined and through which, foreseeability of business should be improved and appropriate taxation should be ensured.
5) Tax autonomy of local governments
    From the standpoint of decentralization, it is desirable for local governments to try to set up their financial sources by utilizing self-determined taxation right. In this case, however, issues relating to taxpayers and base of taxation should be discussed well according to principles of taxation, including fair and neutral taxation. In other words, local governments have to face local taxpayers to implement their taxation measures at their burden and responsibility.

Part VI. Infrastructure Building to Ensure Taxpayer Trust

    In working on the reform of the entire tax systems, it is essential to gain trust of taxpayers in the tax system and tax administration in order to institute a desirable tax system. To this end, tax administration needs to arrange the environment so that taxpayers can carry out self-assessment and tax payment with no difficulty and to consolidate the tax administration system for fair and appropriate taxation. Therefore, to materialize these standpoints, following systems and measures need to be advanced:
1) Taxpayer Identification Numbers (TINs)
    Globalization, informatization, and computerization have been prevailing in worldwide economic transactions in recent years. Under this situation, the environments around the taxpayer identification number system are drastically changing. A growing number of Japanese people have also begun to think that the introduction of the system would be inevitable.
    In the past, a variety of discussions have been made on the taxpayer identification number system, including the significance of the system, concrete application of the system and privacy protection. Thus, it is urgent to start examination and formulate a concrete scheme for introduction.
2) Withholding and Year-End Adjustment of Income Tax
    Income tax is based on taxpayers' self-assessment, and their voluntary filing of returns and payment. And tax withholding and year-end adjustment are carried out on payments of tax on employment income. Since tax amount, including exemptions/deductions as special taxation measures, is adjusted at the end of the year, ordinary employment income earners need no filing an income tax return.
    Tax withholding and year-end adjustment should basically be maintained in the future in order to ensure appropriate and reliable taxation and provide the simplified and to provide taxpayers with convenient tax payment system. However, it is also important for employment income earners to file an income tax return by themselves because this will enhance the awareness of bearing common social costs. Thus, examination should be continued on promoting environments for simplified filing system (including electric filing of returns), while paying sufficient consideration to tax administration.
3) Publication of High-Paying Taxpayers
    The present public notification system exists in income tax, corporation tax and inheritance tax. It has been playing the role of checking taxpayers with the public since 1950 when introduced for the first time. The public notification system of income tax was modified into the tax amount notification system in 1983 partly for the purpose of honoring high-income taxpayers. The system has been occasionally utilized for a purpose other than the original purposes, posing a concern about possible disturbance of privacy. Meanwhile, it is undesirable that the modification of the system leads to lowered reliability of the self-assessment and payment system. Thus, discussions should be made on the existing public notification system, including introduction of an alternative system, by paying attention to the significance that high-income taxpayers should be honored by society.
4) Others